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As filed with the Securities and Exchange Commission on March
9, 2006.








UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





FORM 20-F


(Mark One)


|                                                                      |  |                                                                                                   
|--------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------
|o                                                                     |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                                      |  | OR                                                                                                
|þ                                                                     |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934          
|                                                                     
|For the fiscal year ended: December 31, 2005                         
|                                                                      |  | OR                                                                                                
|o                                                                     |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934      
|                                                                      |  | OR                                                                                                
|o                                                                     |  | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   
|                                                                     
|Date of event requiring this shell company
    report               .
|                                                                     
|For the transition period
    from          to                       
|                                                                     
|Commission file number: 1-14688                                      

E.ON AG




E.ON AG




|                                                |  |                                          
|----------------------------------------------- |  | -----------------------------------------
|Federal Republic of Germany                     |  | E.ON-Platz 1, D-40479 Düsseldorf, GERMANY
|(Jurisdiction of Incorporation or Organization) |  | (Address of Principal Executive Offices) 

Securities registered or to be registered pursuant to
Section 12(b) of the Act:


|                                        |  |                                          
|--------------------------------------- |  | -----------------------------------------
|Title of each class                     |  | Name of each exchange on which registered
|                                        |  |                                          
|American Depositary Shares representing |  |                                          
|Ordinary Shares with no par value       |  | New York Stock Exchange                  
|Ordinary Shares with no par value       |  | New York Stock Exchange*                 

Securities registered or to be registered pursuant to
Section 12(g) of the Act:


None




Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act:


None




Indicate the number of outstanding shares of each of the
issuers classes of capital or common stock as of the close
of the period covered by the annual report.




þ o


o þ




þ o


12b-2


þ o o


o þ


12b-2 o þ










|  |                                                                                                 
|- | ------------------------------------------------------------------------------------------------
|* | Not for trading, but only in connection with the registration of
    American Depositary Shares.



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | E.ON, the Company, the E.ON
    Group or the Group refers to E.ON AG and its
    consolidated subsidiaries.                                                                                                                                                                                                                                                                                                                                                           
|
| |  | VEBA refers to VEBA AG and its consolidated
    subsidiaries prior to its merger with VIAG AG and the name
    change from VEBA AG to E.ON AG. VIAG or the
    VIAG Group refers to VIAG AG and its consolidated
    subsidiaries prior to its merger with VEBA.                                                                                                                                                                                                        
|
| |  | PreussenElektra refers to PreussenElektra AG and its
    consolidated subsidiaries, which merged with Bayernwerk AG and
    its consolidated subsidiaries to form E.ONs German
    and continental European energy business in the Central Europe
    market unit consisting of E.ON Energie AG and its consolidated
    subsidiaries (E.ON Energie).                                                                                                                    
|
| |  | E.ON Ruhrgas refers to E.ON Ruhrgas AG (formerly
    Ruhrgas AG or Ruhrgas) and its consolidated
    subsidiaries, which collectively comprise E.ONs gas
    business in the Pan-European Gas market unit.                                                                                                                                                                                                                                                               
|
| |  | E.ON UK refers to E.ON UK plc (formerly Powergen UK
    plc or Powergen) and its consolidated subsidiaries,
    which collectively comprise E.ONs U.K. energy business in
    the U.K. market unit. Until December 31, 2003, Powergen and
    its consolidated subsidiaries, including LG&E Energy, which
    was held by Powergen until its transfer to a direct subsidiary
    of E.ON AG in March 2003, formed E.ONs former Powergen
    division (Powergen Group).
|
| |  | E.ON Sverige refers to E.ON Sverige AB (formerly
    Sydkraft AB or Sydkraft) and its consolidated
    subsidiaries, and E.ON Finland refers to E.ON
    Finland Oyj (E.ON Finland) and its consolidated
    subsidiaries, which collectively comprised E.ONs Nordic
    energy business in the Nordic market unit until the disposal of
    E.ON Finland.                                                                                                           
|
| |  | E.ON U.S. refers to E.ON U.S. LLC (formerly
    LG&E Energy LLC (LG&E Energy)) and its
    consolidated subsidiaries, which collectively comprise
    E.ONs U.S. energy business in the U.S. Midwest
    market unit. Until December 31, 2003, E.ON U.S. formed
    the U.S. business of the Powergen Group.                                                                                                                                                             
|
| |  | Viterra refers to Viterra AG and its consolidated
    subsidiaries, which collectively comprised E.ONs real
    estate business in the other activities segment.                                                                                                                                                                                                                                                                                                           
|
| |  | Degussa refers to Degussa AG and its consolidated
    subsidiaries, in which E.ON now owns a minority interest, and
    which collectively comprised E.ONs former Degussa division.                                                                                                                                                                                                                                                                                        
|
| |  | VEBA Oel refers to VEBA Oel AG and its consolidated
    subsidiaries, which collectively comprised E.ONs former
    oil division.                                                                                                                                                                                                                                                                                                                                          
|
| |  | VAW refers to VAW aluminium AG and its consolidated
    subsidiaries, which collectively comprised E.ONs former
    aluminum division.                                                                                                                                                                                                                                                                                                                                     
|
| |  | MEMC refers to MEMC Electronic Materials, Inc. and
    its consolidated subsidiaries, which collectively comprised
    E.ONs former silicon wafers division.                                                                                                                                                                                                                                                                                                               

  




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Handelsgesetzbuch, Aktiengesetz,








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TABLE OF CONTENTS


|         |  |                                                                             |  |  |     | 
|-------- |  | --------------------------------------------------------------------------- |  |  | --- | 
|PART I  
|Item 1.  |  | Identity of Directors, Senior Management
    and Advisers                   |  |  | 1   | 
|Item 2.  |  | Offer Statistics and Expected Timetable                                     |  |  | 1   | 
|Item 3.  |  | Key Information                                                             |  |  | 1   | 
|         |  | SELECTED FINANCIAL DATA                                                     |  |  | 1   | 
|         |  | DIVIDENDS                                                                   |  |  | 2   | 
|         |  | EXCHANGE RATES                                                              |  |  | 3   | 
|         |  | RISK FACTORS                                                                |  |  | 4   | 
|Item 4.  |  | Information on the Company                                                  |  |  | 13  | 
|         |  | HISTORY AND DEVELOPMENT OF THE COMPANY                                      |  |  | 13  | 
|         |  | VEBA-VIAG MERGER                                                            |  |  | 13  | 
|         |  | POWERGEN GROUP ACQUISITION                                                  |  |  | 13  | 
|         |  | RUHRGAS ACQUISITION                                                         |  |  | 14  | 
|         |  | PROPOSED ENDESA ACQUISITION                                                 |  |  | 16  | 
|         |  | GROUP STRATEGY                                                              |  |  | 17  | 
|         |  | ON.TOP PROJECT                                                              |  |  | 19  | 
|         |  | OTHER SIGNIFICANT EVENTS                                                    |  |  | 21  | 
|         |  | CAPITAL EXPENDITURES                                                        |  |  | 22  | 
|         |  | BUSINESS OVERVIEW                                                           |  |  | 22  | 
|         |  | INTRODUCTION                                                                |  |  | 22  | 
|         |  | CENTRAL EUROPE                                                              |  |  | 25  | 
|         |  | PAN-EUROPEAN GAS                                                            |  |  | 43  | 
|         |  | U.K.                                                                        |  |  | 60  | 
|         |  | NORDIC                                                                      |  |  | 70  | 
|         |  | U.S. MIDWEST                                                                |  |  | 83  | 
|         |  | OTHER ACTIVITIES                                                            |  |  | 89  | 
|         |  | DISCONTINUED OPERATIONS                                                     |  |  | 90  | 
|         |  | REGULATORY ENVIRONMENT                                                      |  |  | 92  | 
|         |  | ENVIRONMENTAL MATTERS                                                       |  |  | 108 | 
|         |  | OPERATING ENVIRONMENT                                                       |  |  | 114 | 
|         |  | ECONOMIC BACKGROUND                                                         |  |  | 114 | 
|         |  | RISK MANAGEMENT                                                             |  |  | 115 | 
|         |  | ORGANIZATIONAL STRUCTURE                                                    |  |  | 116 | 
|         |  | PROPERTY, PLANTS AND EQUIPMENT                                              |  |  | 116 | 
|         |  | GENERAL                                                                     |  |  | 116 | 
|         |  | PRODUCTION FACILITIES                                                       |  |  | 116 | 
|         |  | INTERNAL CONTROLS                                                           |  |  | 118 | 
|Item 4A. |  | Unresolved Staff Comments                                                   |  |  | 118 | 
|Item 5.  |  | Operating and Financial Review and
    Prospects                            |  |  | 118 | 
|         |  | OVERVIEW                                                                    |  |  | 118 | 
|         |  | ACQUISITIONS AND DISPOSITIONS                                               |  |  | 120 | 
|         |  | CRITICAL ACCOUNTING POLICIES                                                |  |  | 127 | 
|         |  | NEW ACCOUNTING PRONOUNCEMENTS                                               |  |  | 130 | 
|         |  | RESULTS OF OPERATIONS                                                       |  |  | 130 | 
|         |  | BUSINESS SEGMENT INFORMATION                                                |  |  | 131 | 
|         |  | YEAR ENDED DECEMBER 31,
    2005 COMPARED WITH YEAR ENDED DECEMBER 31, 2004 |  |  | 132 | 
|         |  | YEAR ENDED DECEMBER 31,
    2004 COMPARED WITH YEAR ENDED DECEMBER 31, 2003 |  |  | 144 | 
|         |  | INFLATION                                                                   |  |  | 156 | 
|         |  | EXCHANGE RATE EXPOSURE AND CURRENCY RISK
    MANAGEMENT                     |  |  | 156 | 
|         |  | LIQUIDITY AND CAPITAL RESOURCES                                             |  |  | 157 | 

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|                                                     |  |                                                                                  |  |  |     | 
|---------------------------------------------------- |  | -------------------------------------------------------------------------------- |  |  | --- | 
|                                                     |  | RESEARCH AND DEVELOPMENT                                                         |  |  | 163 | 
|                                                     |  | TREND INFORMATION                                                                |  |  | 163 | 
|                                                     |  | PROCESS OF TRANSITION TO INTERNATIONAL
    FINANCIAL REPORTING STANDARDS         |  |  | 163 | 
|                                                     |  | OFF-BALANCE SHEET ARRANGEMENTS                                                   |  |  | 164 | 
|                                                     |  | CONTRACTUAL OBLIGATIONS                                                          |  |  | 166 | 
|Item 6.                                              |  | Directors, Senior Management and
    Employees                                   |  |  | 167 | 
|Item 7.                                              |  | Major Shareholders and Related Party
    Transactions                            |  |  | 179 | 
|Item 8.                                              |  | Financial Information                                                            |  |  | 180 | 
|                                                     |  | CONSOLIDATED FINANCIAL STATEMENTS                                                |  |  | 180 | 
|                                                     |  | LEGAL PROCEEDINGS                                                                |  |  | 180 | 
|                                                     |  | DIVIDEND POLICY                                                                  |  |  | 181 | 
|                                                     |  | SIGNIFICANT CHANGES                                                              |  |  | 182 | 
|Item 9.                                              |  | The Offer and Listing                                                            |  |  | 182 | 
|Item 10.                                             |  | Additional Information                                                           |  |  | 184 | 
|                                                     |  | MEMORANDUM AND ARTICLES OF ASSOCIATION                                           |  |  | 184 | 
|                                                     |  | MATERIAL CONTRACTS                                                               |  |  | 195 | 
|                                                     |  | EXCHANGE CONTROLS                                                                |  |  | 195 | 
|                                                     |  | TAXATION                                                                         |  |  | 196 | 
|                                                     |  | DOCUMENTS ON DISPLAY                                                             |  |  | 199 | 
|Item 11.                                             |  | Quantitative and Qualitative Disclosures
    about Market Risk                   |  |  | 199 | 
|Item 12.                                             |  | Description of Securities Other than Equity
    Securities                       |  |  | 205 | 
|                                                    
|PART II                                             
|Item 13.                                             |  | Defaults, Dividend Arrearages and
    Delinquencies                              |  |  | 205 | 
|Item 14.                                             |  | Material Modifications to the Rights of
    Security Holders and Use of Proceeds |  |  | 205 | 
|Item 15.                                             |  | Controls and Procedures                                                          |  |  | 205 | 
|Item 16A.                                            |  | Audit Committee Financial Expert                                                 |  |  | 205 | 
|Item 16B.                                            |  | Code of Ethics                                                                   |  |  | 205 | 
|Item 16C.                                            |  | Principal Accountant Fees and Services                                           |  |  | 206 | 
|Item 16D.                                            |  | Exemptions from the Listing Standards for
    Audit Committees                   |  |  | 207 | 
|Item 16E.                                            |  | Purchases of Equity Securities by the
    Issuer and Affiliated Purchasers       |  |  | 208 | 
|                                                    
|PART III                                            
|Item 17.                                             |  | Financial Statements                                                             |  |  | 209 | 
|Item 18.                                             |  | Financial Statements                                                             |  |  | 209 | 
|Item 19.                                             |  | Exhibits                                                                         |  |  | 209 | 
|English Translation of the Articles of Association  
|Sale & Purchase Agreement                           
|Section 302 Certification of Chief Executive Officer
|Section 302 Certification of Chief Financial Officer
|Section 906 Certification of CEO and CFO            



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PART I







|        |                                                       
|------- | ------------------------------------------------------
|Item 1. | Identity of Directors, Senior Management and Advisers.








|        |                                         
|------- | ----------------------------------------
|Item 2. | Offer Statistics and Expected Timetable.








|        |                 
|------- | ----------------
|Item 3. | Key Information.




SELECTED FINANCIAL DATA






|                                                                         |  |                                     |         |  |      |  |             |      |  |  |             |  |  |      |             |  |      |  |             |   |  |  |             | 
|------------------------------------------------------------------------ |  | ----------------------------------- | ------- |  | ---- |  | ----------- | ---- |  |  | ----------- |  |  | ---- | ----------- |  | ---- |  | ----------- | - |  |  | ----------- | 
|                                                                         |  | Year Ended December 31,             |        
|                                                                         |  |                                     |        
|                                                                         |  | 2005(1)                             |         |  | 2005 |  |             | 2004 |  |  | 2003        |  |  | 2002 |             |  | 2001 | 
|                                                                         |  |                                     |         |  |      |  |             |      |  |  |             |  |  |      |             |  |      | 
|                                                                         |  | (in millions, except share amounts) |        
|Statement of Income Data:                                                |  |                                     |         |  |      |  |             |      |  |  |             |  |  |      |             |  |      |  |             |   |  |  |             | 
|Sales                                                                    |  | $                                   | 66,788  |  |      |  | 56,399     |      |  |  | 46,742     |  |  |      | 44,109     |  |      |  | 35,300     |   |  |  | 36,041     | 
|Sales excluding electricity and natural gas taxes(2)                     |  |                                     | 61,406  |  |      |  | 51,854      |      |  |  | 42,384      |  |  |      | 40,223      |  |      |  | 34,367      |   |  |  | 35,347      | 
|Income/(Loss) from continuing operations before income taxes             |  |                                     | 8,536   |  |      |  | 7,208       |      |  |  | 6,355       |  |  |      | 5,165       |  |      |  | (947        | ) |  |  | 2,502       | 
|Income/(Loss) from continuing operations after income taxes(3)           |  |                                     | 5,841   |  |      |  | 4,932       |      |  |  | 4,505       |  |  |      | 4,020       |  |      |  | (276        | ) |  |  | 2,403       | 
|Income/(Loss) from continuing operations                                 |  |                                     | 5,186   |  |      |  | 4,379       |      |  |  | 4,027       |  |  |      | 3,575       |  |      |  | (901        | ) |  |  | 1,950       | 
|Income/(Loss) from discontinued operations(4)                            |  |                                     | 3,594   |  |      |  | 3,035       |      |  |  | 312         |  |  |      | 1,512       |  |      |  | 3,487       |   |  |  | 124         | 
|Net income                                                               |  |                                     | 8,771   |  |      |  | 7,407       |      |  |  | 4,339       |  |  |      | 4,647       |  |      |  | 2,777       |   |  |  | 2,048       | 
|Basic earnings/(Loss) per share from continuing operations               |  |                                     | 7.87    |  |      |  | 6.64        |      |  |  | 6.13        |  |  |      | 5.47        |  |      |  | (1.38       | ) |  |  | 2.89        | 
|Basic earnings (Loss) per share from discontinued operations,
    net(4) |  |                                     | 5.45    |  |      |  | 4.61        |      |  |  | 0.48        |  |  |      | 2.31        |  |      |  | 5.35        |   |  |  | 0.18        | 
|Basic earnings per share from net income(5)                              |  |                                     | 13.31   |  |      |  | 11.24       |      |  |  | 6.61        |  |  |      | 7.11        |  |      |  | 4.26        |   |  |  | 3.03        | 
|Balance Sheet Data:                                                      |  |                                     |         |  |      |  |             |      |  |  |             |  |  |      |             |  |      |  |             |   |  |  |             | 
|Total assets                                                             |  | $                                   | 149,875 |  |      |  | 126,562    |      |  |  | 114,062    |  |  |      | 111,850    |  |      |  | 113,503    |   |  |  | 101,659    | 
|Long-term financial liabilities                                          |  |                                     | 12,499  |  |      |  | 10,555      |      |  |  | 13,540      |  |  |      | 14,884      |  |      |  | 17,576      |   |  |  | 9,308       | 
|Stockholders equity(6)                                                  |  |                                     | 52,678  |  |      |  | 44,484      |      |  |  | 33,560      |  |  |      | 29,774      |  |      |  | 25,653      |   |  |  | 24,462      | 
|Number of authorized shares                                              |  |                                     |         |  |      |  | 692,000,000 |      |  |  | 692,000,000 |  |  |      | 692,000,000 |  |      |  | 692,000,000 |   |  |  | 692,000,000 | 






|    |                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts in this column are unaudited and have been translated
    solely for the convenience of the reader at an exchange rate of
    $1.1842 = 1.00,
    the Noon Buying Rate on December 30, 2005.

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|    |                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Laws in Germany and other European countries in which E.ON
    operates require the seller of electricity to collect
    electricity taxes and remit such amounts to tax authorities.
    Similar laws also require the seller of natural gas to collect
    and remit natural gas taxes to tax authorities.
|   
|(3) | Before minority interest of
    553 million
    for 2005, as compared with
    478 million,
    445 million,
    625 million
    and
    453 million
    for 2004, 2003, 2002 and 2001, respectively.                                                                                                  
|   
|(4) | For more details, see Item 5. Operating and Financial
    Review and Prospects  Acquisitions and
    Dispositions  Discontinued Operations and
    Note 4 of the Notes to Consolidated Financial Statements.                                                                                            
|   
|(5) | Includes earnings per share from the first-time application of
    new U.S. GAAP standards of
    (0.01),
    0.00,
    (0.67),
    0.29 and
    (0.04) for 2005,
    2004, 2003, 2002 and 2001, respectively.                                                                                         
|   
|(6) | After minority interests.                                                                                                                                                                                                                                                                                   




DIVIDENDS




|                        |  |                |      |  |      |  |      | 
|----------------------- |  | -------------- | ---- |  | ---- |  | ---- | 
|                        |  | Dividends Paid |     
|                        |  | per Ordinary   |     
|                        |  | Share with no  |     
|                        |  | par value      |     
|                        |  |                |     
|Year Ended December 31, |  |               |      |  | $(1) | 
|                        |  |                |      |  |      | 
|2001                    |  |                | 1.60 |  |      |  | 1.49 | 
|2002                    |  |                | 1.75 |  |      |  | 1.96 | 
|2003                    |  |                | 2.00 |  |      |  | 2.39 | 
|2004                    |  |                | 2.35 |  |      |  | 3.04 | 
|2005(2)(3)              |  |                | 2.75 |  |      |  | 3.26 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Translated into dollars at the Noon Buying Rate on the dividend
    payment date, which typically occurred during the second quarter
    of the following year, except for the 2005 amount, which has
    been translated at the Noon Buying Rate on December 30,
    2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | The dividend amount for the year ended December 31, 2005 is
    the amount proposed by E.ONs Supervisory Board and Board
    of Management and has not yet been approved by its stockholders.
    Prior to the payment of the dividends, a resolution approving
    such amount must be passed by E.ONs stockholders at the
    annual general meeting to be held on May 4, 2006.                                                                                                                                                                                                                                                                                                                                              
|   
|(3) | E.ONs Supervisory Board and Board of Management have also
    proposed an extra dividend for 2005 of
    4.25 per
    Ordinary Share, resulting from the proceeds from the sale of
    E.ONs remaining 42.9 percent stake in Degussa. For
    details on this transaction, see Item 5. Operating
    and Financial Review and Prospects  Overview.
    The extra dividend has not yet been approved by E.ONs
    stockholders. Prior to the payment of this dividend, which will
    be made together with the regular dividend amount for the year
    ended December 31, 2005, a resolution approving such amount
    must be passed by E.ONs stockholders at the annual general
    meeting to be held on May 4, 2006.



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EXCHANGE RATES









|       |           |            |        |  |      |  |  |        |  |  |            |        |  |  |        |  | 
|------ | --------- | ---------- | ------ |  | ---- |  |  | ------ |  |  | ---------- | ------ |  |  | ------ |  | 
|Period |           | Average(1) |        |  | High |  |  | Low    |  |  | Period-End |       
|       |           |            |        |  |      |  |  |        |  |  |            |       
|2001   |           |            | 0.8909 |  |      |  |  |        |  |  |            |        |  |  | 0.8901 | 
|2002   |           |            | 0.9495 |  |      |  |  |        |  |  |            |        |  |  | 1.0485 | 
|2003   |           |            | 1.1411 |  |      |  |  |        |  |  |            |        |  |  | 1.2597 | 
|2004   |           |            | 1.2478 |  |      |  |  |        |  |  |            |        |  |  | 1.3538 | 
|2005   |           |            | 1.2400 |  |      |  |  |        |  |  |            |        |  |  | 1.1842 | 
|       | September |            |        |  |      |  |  | 1.2538 |  |  |            | 1.2011 |  |  |        |  | 
|       | October   |            |        |  |      |  |  | 1.2148 |  |  |            | 1.1914 |  |  |        |  | 
|       | November  |            |        |  |      |  |  | 1.2067 |  |  |            | 1.1667 |  |  |        |  | 
|       | December  |            |        |  |      |  |  | 1.2041 |  |  |            | 1.1699 |  |  |        |  | 
|2006   |           |            |        |  |      |  |  |        |  |  |            |        |  |  |        | 
|       | January   |            |        |  |      |  |  | 1.2287 |  |  |            | 1.1980 |  |  |        |  | 
|       | February  |            |        |  |      |  |  | 1.2100 |  |  |            | 1.1860 |  |  |        |  | 






|    |                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The average of the Noon Buying Rates for the relevant period,
    calculated using the average of the Noon Buying Rates on the
    last business day of each month during the period.




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RISK FACTORS


Gesetz zur Kontrolle und Transparenz im
Unternehmensbereich, KonTraG KonTraG KonTraG.


KonTraG,




| |   |                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Standardized documentation of risks and countermeasures;                                                                                                                         
|
| |  | Evaluation of risks according to the degree of severity and the
    probability of occurrence, and an annual assessment of the
    effectiveness of existing countermeasures; and
|
| |  | Analysis of the results and structured disclosure in a risk
    report.                                                                                                          



External






| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | The Companys core energy operations face strong
    competition, which could depress margins.





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Changes in applicable laws and regulations could
materially and adversely affect the Companys financial
condition and results of operations.




Bundesnetzagentur


2 2 2 2 2




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on-site








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | As described above, EU directives provide that the regulatory
    authority which was appointed in Germany should have the power
    to set or approve network access charges or, alternatively, the
    methodologies used for calculating them. This could lead to
    lower network fees for E.ONs electricity and gas
    transportation and distribution businesses in Germany.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | In Germany, the state antitrust authorities in Bavaria,
    Thuringia, Schleswig-Holstein,
    Baden-Wuerttemberg and
    Lower Saxony, as well as the Federal Cartel Office, have
    launched investigations of certain utilities with allegedly high
    gas tariffs to determine whether these gas prices constitute
    market abuse. These investigations affect some utilities in
    which Thüga and E.ON Energie hold interests. As a result of
    ongoing discussions with the Federal Cartel Office, E.ONs
    regional sales companies have agreed to enable their residential
    customers to switch gas suppliers as from April 1, 2006.
    Although a similar investigation by the Federal Cartel Office
    against subsidiaries of E.ON Energie has been closed without any
    charges being brought, that office has since opened an
    investigation of E.ON Energie and its competitor RWE with regard
    to possible abuses in the markets for electricity and/or
    CO2
    emission certificates. The Company cannot currently predict the
    outcome of any of the pending investigations.                                                                              
|
| |  | Electricity and gas prices and sales practices have also been
    the subject of periodic challenges by the German antitrust
    authorities, although to date E.ON has prevailed in such cases,
    sometimes on appeal after a negative ruling by a court of first
    instance. Currently, 54 customers of E.ON Hanse AG (E.ON
    Hanse) have brought a claim asserting that recent price
    increases violate certain provisions of the German Civil Code
    (Bürgerliches Gesetzbuch). In order to support its
    case that the price increases were reasonable within the meaning
    of applicable law, E.ON Hanse has disclosed the basis on which
    it calculates prices for household customers to the District
    Court (Landgericht)in Hamburg. The court is currently
    examining E.ON Hanses submissions in this respect and is
    expected to make an initial pronouncement in the spring of 2006.
    In an unrelated proceeding, E.ON Westfalen Weser AG (E.ON
    Westfalen Weser) has brought suit against a group of
    customers that have refused to pay the increased prices. No
    assurances can be given as to the outcome of either of these
    proceedings.
|
| |  | With effect from April 2005, regulators in the United Kingdom
    renewed a price control framework for electricity distribution
    customers that is in effect through the five year period ending
    March 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | In the United States, the rates for E.ON U.S.s retail
    electric and gas customers in Kentucky, its principal area of
    operations, are set by state regulators and remain in effect
    until such time that an adjustment is sought and approved. E.ON
    U.S.s affected utilities applied for and received
    increases in regulated tariffs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

6



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##### Table of Contents



| |  |                                                                                                                                           
| |  | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | effective as of July 1, 2004, although such increases
    remain the subject of continuing regulatory review and
    governmental inquiry.



Rising fuel prices could materially and adversely affect
the Companys results of operations and financial
condition.






Recent events have heightened concerns about the
reliability of Russian gas supplies, on which E.ON Ruhrgas
depends.


force majeure.


7



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##### Table of Contents



The Companys revenues and results of operations
fluctuate by season and according to the weather, and management
expects these fluctuations to continue.




Operational




E.ON Ruhrgas long-term gas contracts expose it to
volume and price risks, and the validity of its longer-term
supply contracts has been challenged by the German antitrust
authorities.




8



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##### Table of Contents





(Oberlandesgericht)




If the Companys plans to make selective acquisitions
and investments to enhance its core energy business are
unsuccessful, the Companys future earnings and share price
could be materially and adversely affected.




9



---



##### Table of Contents










The Company could be subject to environmental liability
associated with its nuclear and conventional power operations
that could materially and adversely affect its business.


(Umwelthaftungsgesetz)




10



---



##### Table of Contents





x x 2 Bundesimmissionsschutzgesetz, x




If power outages involving the Companys electricity
operations occur, the Companys business and results of
operations could be negatively affected.




11



---



##### Table of Contents






Financial


The Company is exposed to financial risks that could have
a material effect on its financial condition.






2 over-the 


12



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|        |                            
|------- | ---------------------------
|Item 4. | Information on the Company.




HISTORY AND DEVELOPMENT OF THE COMPANY


(Handelsregister)







VEBA-VIAG MERGER












POWERGEN GROUP ACQUISITION




13



---



##### Table of Contents





     







RUHRGAS ACQUISITION













(Oberlandesgericht)


14



---



##### Table of Contents







(Hauptverfahren)





i.e.      


(Bundesministerium für Wirtschaft und Technologie)


15



---



##### Table of Contents









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In the Pan-European Gas market unit, E.ON intends to leverage
    its increased gas operations to improve its negotiating position
    with producers of natural gas, and to take advantage of
    pan-European gas arbitrage opportunities. For information about
    E.ONs planned capital investment in E.ON Ruhrgas, see
    Item 5. Operating and Financial Review and
    Prospects  Liquidity and Capital Resources.                                                                
|
| |  | In the Central Europe market unit, E.ON expects to benefit from
    joint market management with regional energy companies, the
    integration of continental European gas trading activities and
    the sharing of technical expertise among the power and gas
    businesses. In order to integrate the Companys continental
    European gas trading activities conducted by D-Gas B.V.
    (D-Gas), E.ON Energie transferred their gas trading
    operations to E.ON Ruhrgas in 2004.
|
| |  | In the U.K. market unit, E.ON intends to use the Pan-European
    Gas market unit to enhance E.ON UKs gas supply and gas
    storage options, as well as support its trading activities. An
    important first step was the conclusion of a
    10-year gas supply
    contract between E.ON Ruhrgas and E.ON UK. E.ON Ruhrgas started
    supplying E.ON UK with gas in October 2004.                                                                                                       
|
| |  | In the Nordic market unit, E.ON also intends to use the
    Pan-European Gas market unit to enhance E.ON Sveriges gas
    supply options and expects to be able to use a joint approach
    for future gas infrastructure development. E.ON Ruhrgas and E.ON
    Sverige have also entered into a gas supply contract, pursuant
    to which E.ON Ruhrgas started to supply E.ON Sverige with
    natural gas in autumn 2005.                                                                 








PROPOSED ENDESA ACQUISITION


20-F 6-K


   


16



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##### Table of Contents















 





GROUP STRATEGY




| |                                   
| | ----------------------------------
| | E.ONs Business Model After On.top





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | An Integrated Power and Gas Business. E.ON intends to
    follow a long-term strategy with a clear focus on integrated
    power and gas operations that enjoy leading positions in their
    respective markets. In doing so, it seeks to develop positions
    throughout the energy value chain, including positions in
    infrastructure where they are seen as enhancing E.ONs
    access to markets and customers.                                                                                                                    
|
| |  | A Clear Geographic Focus. E.ON seeks to strengthen its
    leading positions and performance in its existing markets
    (Central Europe, Pan-European Gas, U.K., Nordic and
    U.S. Midwest), while taking focused steps in new markets
    such as Italy, Russia and  through the proposed
    acquisition of Endesa  also Spain.                                                                                                                                                                                                        
|
| |  | Clear Strategic Priorities. E.ONs first priority is
    to strengthen and grow its position in European markets while
    maintaining a strong and diversified generation portfolio and
    enhancing its gas supply position through investments in
    equity gas produced from fields in which E.ON holds
    an interest, as well as the potential development of liquefied
    natural gas (LNG) as an alternative form of gas
    delivery. E.ON currently views the United States as an
    opportunity for more long-term growth.

17



---



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| |   |                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Strict Investment Criteria. In following this model, E.ON
    applies strict strategic and financial criteria to each
    potential investment, focusing on those which management
    believes exhibit the potential for material value creation.



| |         
| | --------
| | Strategy





| |   |                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Creating value from the convergence of European energy markets
    (e.g., as the United Kingdom becomes a net importer of
    gas and can take advantage of greater pipeline capacity
    connecting it to continental Europe, E.ON will be able to supply
    its retail gas business in the United Kingdom from its
    Pan-European Gas supply business);
|
| |  | Creating value from vertical integration (i.e.,
    establishing a presence in all portions of the value chains for
    both power and gas);                                                                                                                                                                                                                
|
| |  | Creating value from the convergence of the electricity and gas
    value chains (e.g., offering retail electricity and gas
    customers energy from a single source), thus providing E.ON with
    opportunities to realize economies of scale in servicing costs
    while increasing customer loyalty, thus reducing its customer
    churn rate;      
|
| |  | Enhancing operational performance through identifying and
    transferring best practice for common activities throughout the
    Groups different market units (e.g., effective
    programs for enhancing E.ONs electricity generation,
    distribution and retailing businesses);                                                                     
|
| |  | Improving the Groups competitive position in its target
    markets, both through organic growth and through pursuing
    selective investments which contribute to these objectives or
    provide stand alone value creation opportunities, as described
    below;                                                                                      
|
| |  | Creation of a common corporate culture under the OneE.ON
    project, which seeks to enhance integration of all market units
    and their subsidiaries under the E.ON banner so as to help the
    E.ON Group realize its vision and strategic goals, while
    maintaining its commitment to corporate social
    responsibilities; and                   
|
| |  | Tapping value-enhancing growth potential in new markets such as
    Italy, Russia and Spain.                                                                                                                                                                                                                                                                





| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | Central Europe  Fortifying strong market positions
    and developing new growth potential through:



| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | consolidation of distribution and sales activities and
    capitalizing on opportunities from power-gas convergence;                                                 
|
| |  | re-investing in power generation to maintain the strong market
    position;                                                                                         
|
| |  | hedging exposure to price risks through vertical integration of
    generation and sales operations;                                                                 
|
| |  | participating in the privatization of power and downstream gas
    companies in eastern Central Europe, as well as selective
    investments in power generation; and
|
| |  | continued growth in the new market of Italy, i.e. in
    power generation.                                                                                           



| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | Pan-European Gas  Strengthening and diversifying E.ON
    Ruhrgas current position through:



| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | selective equity investments in gas production in the North Sea
    and Russia;                         
|
| |  | evaluation of LNG options (including upstream positions) to
    ensure long-term supply diversification;
|
| |  | participation in infrastructure projects to enhance gas supply
    position in Europe; and              
|
| |  | selective acquisitions of mid- and downstream companies in
    Europe.                                  

18



---



##### Table of Contents





| |   |                                                                   
| | - | ------------------------------------------------------------------
| |  | U.K.  Enhancing profitability of the U.K. businesses
    through:



| |   |                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | investing in flexible generation assets and low carbon intensive
    generating technologies, such as Combined Cycle Gas Turbine
    (CCGT), to maintain a low cost hedge for changes in
    retail electricity demand;
|
| |  | investing in the generation of power from renewable resources to
    capture value from the U.K. governments renewable
    obligation mandate; and                                                                      
|
| |  | investing in gas storage assets to hedge against potentially
    volatile gas price movements as the United Kingdom starts
    to become a net importer of gas.                                                          



| |   |                                                
| | - | -----------------------------------------------
| |  | Nordic  Strengthening E.ONs position through:



| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | expanding its presence in power generation;                                                   
|
| |  | enhancing scale through synergistic acquisitions in distribution
    and district heating; and
|
| |  | continued participation in gas supply and infrastructure
    developments.                    



| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | U.S. Midwest  Focusing on optimizing E.ON
    U.S.s current operations in Kentucky and delivering
    additional performance improvements. This could include
    investments in generation capacity if the demand for electricity
    grows and the U.S. regulatory authorities enable the
    Company to earn a return on investment that meets its stringent
    criteria.








ON.TOP PROJECT






| |   |                                                               
| | - | --------------------------------------------------------------
| |  | Central Europe, led by E.ON Energie AG;                       
|
| |  | Pan-European Gas, led by E.ON Ruhrgas AG;                     
|
| |  | U.K., led by E.ON UK plc;                                     
|
| |  | Nordic, led by E.ON Nordic AB; and                            
|
| |  | U.S. Midwest, led by E.ON U.S. LLC (formerly LG&E
    Energy).



19



---



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| |   |                                                     
| | - | ----------------------------------------------------
| |  | The transfer by E.ON Energie to E.ON Ruhrgas of its:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 67.7 percent interest in Thüga;                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | 29.95 percent interest of its 40.0 percent interest in
    the Austrian company RAG Beteiligungs-Aktiengesellschaft, which
    owns a 75.0 percent share in the Austrian exploration and
    production company Rohöl-Aufsuchungs Aktiengesellschaft;
    the remaining 10.05 percent interest was swapped with the
    Austrian company EVN AG for its 31.23 percent shareholding
    in the Hungarian gas distribution company
    Közép-dunántúli
    Gázszolgáltató Rt. (KÖGÁZ)
    in April 2005;
|
| |  | 18.8 percent interest in the Latvian gas supplier JSC
    Latvijas Gaze;                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | 14.3 percent interest in the Lithuanian gas distributor AB
    Lietuvos Dujos; and its                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | gas trading company D-Gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



| |   |                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------
| |  | The transfer by E.ON Ruhrgas to E.ON Energie of its downstream
    gas activities in the Czech Republic and Hungary, including its:



| |   |                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------
| |  | 4.45 percent interest in the Czech gas distribution company
    Jihomoravská plynárenská a.s. (JMP);                                 
|
| |  | 27.6 percent interest in the Czech gas distribution company
    Západoceská plynárenská a.s.
    (ZCP);                              
|
| |  | 24.0 percent interest in the Czech gas distribution company
    Prazská plynárenská Holding a.s.
    (PPH);                          
|
| |  | 0.05 percent interest in the Czech gas distribution company
    Prazská plynárenská a.s. (PP);                                       
|
| |  | 14.3 percent interest in the Czech gas distribution company
    Stredoceska plynárenská a.s. (STP);                                  
|
| |  | 9.57 percent interest in the Czech gas distribution company
    Severomoravská plynárenská a.s. (SMP);                               
|
| |  | 16.52 percent interest in the Czech gas distribution
    company Východoceská plynárenská a.s.
    (VCP);                            
|
| |  | 49.8 percent interest in the Hungarian gas distribution
    company Déldunántuli Gázszolgáltató
    Részvenytársaság (DDGÁZ); and its

20



---



##### Table of Contents





| |   |                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------
| |  | 16.3 percent interest in the Hungarian gas distribution
    company Fövárosi Gázmüvek
    Részvénytársaság
    (FÖGÁZ).



| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The transfer by E.ON Energie to E.ON AG of its 100 percent
    interest in E.ON Scandinavia (which has since been renamed E.ON
    Nordic), including its:



| |   |                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 55.2 percent interest in Sydkraft (which has since been
    renamed E.ON Sverige), including its interest in Graninge AB
    (Graninge) and its interest in the Baltic Cable; and
    a
|
| |  | 65.6 percent interest in E.ON Finland.                                                                                                                                                   






OTHER SIGNIFICANT EVENTS




















21



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##### Table of Contents


















CAPITAL EXPENDITURES


  





BUSINESS OVERVIEW





INTRODUCTION




Core Energy Business


Central Europe.   


Pan-European Gas.


22



---



##### Table of Contents



  


U.K.  


Nordic.   


U.S. Midwest.  


Corporate Center.


Other Activities


Degussa.


23



---



##### Table of Contents












|                       |                        |           |        |        |      |  |       |           |  |  |        |        |  |           |       |       |   |  |        |        |  |  |       |      | 
|---------------------- | ---------------------- | --------- | ------ | ------ | ---- |  | ----- | --------- |  |  | ------ | ------ |  | --------- | ----- | ----- | - |  | ------ | ------ |  |  | ----- | ---- | 
|                       |                        | 2005      |        |        | 2004 |  |       | 2003      | 
|                       |                        |           |        |        |      |  |       |           | 
|                       |                        | ( in     |        |        |      |  | ( in |           |  |  |        | ( in  |  |           |      
|                       |                        | millions) |        |        | %    |  |       | millions) |  |  | %      |        |  | millions) |       |       | % | 
|                       |                        |           |        |        |      |  |       |           |  |  |        |        |  |           |       |       |   | 
|Central Europe(1)(2)   |                        |           | 24,295 |        |      |  | 43.1  |           |  |  | 20,752 |        |  |           | 44.4  |       |   |  | 19,253 |        |  |  | 43.6  |     
|Pan-European Gas(2)(3) |                        |           | 17,914 |        |      |  | 31.8  |           |  |  | 13,227 |        |  |           | 28.3  |       |   |  | 11,919 |        |  |  | 27.0  |     
|U.K.                   |                        |           | 10,176 |        |      |  | 18.0  |           |  |  | 8,490  |        |  |           | 18.2  |       |   |  | 7,923  |        |  |  | 18.0  |     
|Nordic(4)              |                        |           | 3,471  |        |      |  | 6.2   |           |  |  | 3,347  |        |  |           | 7.1   |       |   |  | 2,824  |        |  |  | 6.4   |     
|U.S. Midwest(2)        |                        |           | 2,045  |        |      |  | 3.6   |           |  |  | 1,718  |        |  |           | 3.7   |       |   |  | 1,771  |        |  |  | 4.0   |     
|Corporate Center(2)(5) |                        |           | (1,502 | )      |      |  | (2.7  | )         |  |  | (792   | )      |  |           | (1.7  | )     |   |  | (575   | )      |  |  | (1.3  | )   
|                       |                        |           |        |        |      |  |       |           |  |  |        |        |  |           |       |       |   | 
|                       | Core Energy Business   |           |        | 56,399 |      |  |       | 100.0     |  |  |        | 46,742 |  |           |       | 100.0 |   |  |        | 43,115 |  |  |       | 97.7 | 
|                       | Other Activities(2)(6) |           |        | 0      |      |  |       | 0         |  |  |        | 0      |  |           |       | 0     |   |  |        | 994    |  |  |       | 2.3  | 
|                       |                        |           |        |        |      |  |       |           |  |  |        |        |  |           |       |       |   | 
|Total Revenues(7)      |                        |           | 56,399 |        |      |  | 100.0 |           |  |  | 46,742 |        |  |           | 100.0 |       |   |  | 44,109 |        |  |  | 100.0 |     
|                       |                        |           |        |        |      |  |       |           |  |  |        |        |  |           |       |       |   | 






|    |                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes electricity taxes of
    1,049 million
    in 2005,
    1,051 million
    in 2004 and
    1,015 million
    in 2003.                                                                                                                                                                               
|   
|(2) | Excludes the sales of certain activities now accounted for as
    discontinued operations. For more details, see
    Item 5. Operating and Financial Review and
    Prospects  Acquisitions and Dispositions 
    Discontinued Operations and Note 4 of the Notes to
    Consolidated Financial Statements.
|   
|(3) | Includes the sales of the former Ruhrgas activities from the
    date of consolidation on February 1, 2003. Sales include
    natural gas and electricity taxes of
    3,110 million
    in 2005,
    2,923 million
    in 2004 and
    2,555 million
    in 2003.                                          
|   
|(4) | Sales include electricity and natural gas taxes of
    402 million
    in 2005,
    395 million
    in 2004 and
    324 million
    in 2003.                                                                                                                                                                
|   
|(5) | Includes primarily the parent company and effects from
    consolidation, as well as the results of its remaining
    telecommunications interests, as explained above.                                                                                                                                        
|   
|(6) | Includes sales of Degussa until January 2003, prior to its
    deconsolidation. For more details, see  Other
    Activities  Degussa, Item 5.
    Operating and Financial Review and Prospects 
    Overview and Note 4 of the Notes to Consolidated
    Financial Statements.                          
|   
|(7) | Excludes intercompany sales.                                                                                                                                                                                                                                                                                   

24



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CENTRAL EUROPE




| |         
| | --------
| | Overview

   








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In 2005, E.ON Energie increased its stake in the Hungarian gas
    distribution and supply company KÖGÁZ from
    31.2 percent to 98.1 percent in several steps. In
    2005, the company sold an aggregate of approximately 8.3 TWh of
    gas to 0.3 million customers.                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | In February 2005, E.ON Energie acquired 67.0 percent stakes
    in each of the two Bulgarian electricity distribution companies
    Varna and Gorna Oryahovitza. The companies operate in
    northeastern Bulgaria. In 2005, the companies sold an aggregate
    of approximately 4.9 TWh of electricity to 1.1 million
    customers.                                                                                                                                                                                                                                                                                                         
|
| |  | In July 2005, E.ON Energie transferred its 51.0 percent
    interest (49.0 percent voting interest) in Gasversorgung
    Thüringen GmbH (GVT) and its 72.7 percent
    interest in Thüringer Energie AG (TEAG) to
    Thüringer Energie Beteiligungsgesellschaft mbH
    (TEB). Municipal shareholders also transferred
    interests in GVT totaling 43.9 percent to TEB.
    Consequently, GVT was merged into TEAG and the merged entity was
    renamed E.ON Thüringer Energie AG (ETE).
    Following this reorganization, E.ON Energie holds an
    81.5 percent interest in TEB and TEB holds a
    76.8 percent interest in ETE.
|
| |  | In July 2005, E.ON Energie acquired an additional
    0.9 percent interest in Contigas Deutsche Energie AG
    (Contigas) through a public offer. In June 2005, the
    general meeting of Contigas passed a resolution authorizing E.ON
    Energie to use a squeeze-out procedure to acquire the remaining
    Contigas stock held by minority shareholders. Following the
    completion of the squeeze-out in November 2005, E.ON Energie
    acquired the remaining 0.2 percent and now owns
    100 percent of Contigas.                                                                                                                

25



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In September 2005, E.ON Energie acquired a 24.6 percent
    stake in the Romanian electricity distribution company Electrica
    Moldova  now renamed E.ON Moldova  and
    simultaneously increased its stake in the company to
    51.0 percent by subscribing to a capital increase. In 2004,
    the company sold approximately 4.3 TWh of electricity to
    1.3 million customers.                                            
|
| |  | In September 2005, E.ON Benelux acquired 100.0 percent of
    the Dutch power and gas company NRE Energie b.v.
    (NRE). In 2004, the company supplied approximately
    1.6 TWh of electricity and approximately 4.8 TWh of gas to
    approximately 0.3 million electricity and gas customers in
    the Netherlands.                                                                                                            
|
| |  | In 2005, E.ON Energie decided to invest in new power plants in
    Germany in Irsching (530 MW natural gas) and Datteln
    (1,100 MW hard coal). Additionally, E.ON Energie plans to
    build a new Italian power plant at Livorno Ferraris (800 MW
    natural gas). For more information, see Item 5.
    Operating and Financial Review and Prospects 
    Liquidity and Capital Resources  Expected Investment
    Activity.
|
| |  | In February 2006, E.ON Energie and RWE signed agreements to swap
    certain shareholdings in the Czech Republic and Hungary. These
    transactions are subject to regulatory and corporate approvals
    and are expected to be completed in 2006.                                                                                                                                                                                  






CENTRAL EUROPE MARKET UNIT


Holding Company







|  |                                                                                
|- | -------------------------------------------------------------------------------
| | Leading entity for the management and coordination of the group
    activities.
| | Centralized strategic, controlling and service functions.                      



| |               
| | --------------
| | Western Europe

Conventional Power Plants







|  |                                               
|- | ----------------------------------------------
| | Power generation by conventional power plants.
| | Waste incineration.                           
| | Renewables.                                   
| | District heating.                             
| | Industrial power plants.                      



Nuclear Power Plants







|  |                                          
|- | -----------------------------------------
| | Power generation by nuclear power plants.



Hydroelectric Power Plants







|  |                                                
|- | -----------------------------------------------
| | Power generation by hydroelectric power plants.

E.ON Benelux Holding B.V. (100%)




|  |                                                                  
|- | -----------------------------------------------------------------
| | Power generation by conventional power plants in the Netherlands.
| | District heating in the Netherlands.                             
| | Sales of power and gas in the Netherlands.                       

Transmission







|  |                                                                             
|- | ----------------------------------------------------------------------------
| | Operation of high voltage grids (380 kilovolt-110 kilovolt).                
| | System operation, including provision of regulating and
    balancing power.

Distribution, Sale and Trading of Electricity, Gas and
Heat







|  |                                                                                                                                
|- | -------------------------------------------------------------------------------------------------------------------------------
| | Supply of electricity and energy services to large industrial
    customers, as well as to regional and municipal distributors.
| | Centralized wholesale functions.                                                                                               
| | Optimization of energy procurement costs.                                                                                      
| | Physical energy trading and trading of energy-based financial
    instruments and related risk management.                     
| | Optimization of the value of the power plants assets in
    the market place.                                                 
| | Emissions trading.                                                                                                             







26



---



##### Table of Contents



|  |                                                                                   
|- | ----------------------------------------------------------------------------------
| | Distribution and sale of electricity, gas, heat and water to
    retail customers.
| | Energy support services.                                                          
| | Waste incineration.                                                               






|  |                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------
| | Customer service and electricity and heat supply to utilities
    and industrial customers in the Ruhr region.



| |               
| | --------------
| | Eastern Europe

E.ON Hungária Energetikai ZRt. (100%)


|  |                                                                                                     
|- | ----------------------------------------------------------------------------------------------------
| | Generation, distribution and sale of electricity and gas in
    Hungary through its group companies.



E.ON Czech Holding AG (100%)


|  |                                                                                                        
|- | -------------------------------------------------------------------------------------------------------
| | Generation, distribution and sale of electricity in the Czech
    Republic through its group companies.

E.ON Moldova S.A. (51%)


|  |                                                 
|- | ------------------------------------------------
| | Distribution and sale of electricity in Romania.

E.ON Bulgaria EAD (100%)


|  |                                                                                  
|- | ---------------------------------------------------------------------------------
| | Distribution and sale of electricity in Bulgaria through its
    group companies.

Západoslovenská energetika a.s. (49.0% held at
equity)


|  |                                                  
|- | -------------------------------------------------
| | Distribution and sale of electricity in Slovakia.



Consulting and Support Services







|  |                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------
| | Provision of consulting and planning services in the energy
    sector to companies within the Group and third parties.            
| | Marketing of expertise in the area of conventional, renewable,
    cogeneration and nuclear power generation and pipeline business.






|  |                                                                                                  
|- | -------------------------------------------------------------------------------------------------
| | Provision of information technology services to companies within
    the Group and third parties.






|  |                         
|- | ------------------------
| | Infrastructure services.






|    |                                                                    
|--- | -------------------------------------------------------------------
|(1) | The remaining 43.0 percent is held by E.ON Ruhrgas.                
|   
|(2) | The remaining 40.0 percent is held by E.ON AG and E.ON
    Ruhrgas.



27



---



##### Table of Contents



Operations




|                       |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Generation:            |  | the production of electricity at power stations;                                                                                                                                                                                                                                                                                                                                                  
|                      
|Transmission:          |  | the bulk transfer of electricity across an interregional power
    grid, which consists mainly of overhead transmission lines,
    substations and some underground cables (at this level there is
    a market for bulk trading of electricity, through which sales
    and purchases of electricity are made between generators,
    regional distributors, and other suppliers of electricity);
|                      
|Distribution and Sale: |  | the transfer and sale of electricity from the interregional
    power grid and its delivery, across local distribution systems,
    to customers; and                                                                                                                                                                                                                                             
|                      
|Trading:               |  | the buying and selling of electricity and related products for
    purposes of portfolio optimization, arbitrage and risk
    management.                                                                                                                                                                                                                                                         





|                                                                       |                                                                                     |         |         |         |         |  |         |         |         |  |       |       |      | 
|---------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ------- | ------- | ------- | ------- |  | ------- | ------- | ------- |  | ----- | ----- | ---- | 
|                                                                       |                                                                                     | 2005    |         |         | 2004    |  |         |        
|                                                                       |                                                                                     | million |         |         | million |  |         | %       |        
|Sources of Power                                                       |                                                                                     | kWh     |         |         | kWh     |  |         | Change  |        
|                                                                       |                                                                                     |         |         |         |         |  |         |         |        
|Own production                                                         |                                                                                     |         | 129,063 |         |         |  | 131,278 |         |         |  | -1.7  |      
|Purchased power                                                        |                                                                                     |         | 142,215 |         |         |  | 123,035 |         |         |  | +15.6 |      
|                                                                       | from power stations in which E.ON Energie has an interest of
    50 percent or less |         |         | 12,019  |         |  |         | 11,223  |         |  |       | +7.1  |     
|                                                                       | from other suppliers                                                                |         |         | 130,196 |         |  |         | 111,812 |         |  |       | +16.4 |     
|Total power procured(1)                                                |                                                                                     |         | 271,278 |         |         |  | 254,313 |         |         |  | +6.7  |      
|Power used for operating purposes, network losses and pump
    storage |                                                                                     |         | (12,735 | )       |         |  | (10,239 | )       |         |  | +24.4 |      
|                                                                       |                                                                                     |         |         |         |         |  |         |         |        
|                                                                       |                                                                                     | Total   |         |         | 258,543 |  |         |         | 244,074 |  |       |       | +5.9 | 
|                                                                       |                                                                                     |         |         |         |         |  |         |         |        






|    |                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excluding physically-settled electricity trading activities at
    E.ON Sales & Trading GmbH (EST). ESTs
    physically-settled electricity trading activities amounted to
    113,666 million kWh and 110,914 million kWh in 2005
    and 2004, respectively.



28



---



##### Table of Contents







|                                                                 |       |         |         |         |         |  |         |           |  |  |      |      | 
|---------------------------------------------------------------- | ----- | ------- | ------- | ------- | ------- |  | ------- | --------- |  |  | ---- | ---- | 
|                                                                 |       | Total   |         |         | Total   |  |         |          
|                                                                 |       | 2005    |         |         | 2004    |  |         | %         | 
|                                                                 |       | million |         |         | million |  |         | Change in | 
|Sale of Power(1) to                                              |       | kWh     |         |         | kWh     |  |         | Total     | 
|                                                                 |       |         |         |         |         |  |         |           | 
|Non-consolidated interregional, regional and municipal utilities |       |         | 138,425 |         |         |  | 130,862 |           |  |  | +5.8 |     
|Industrial and commercial customers                              |       |         | 77,175  |         |         |  | 72,077  |           |  |  | +7.1 |     
|Residential and small commercial customers                       |       |         | 42,943  |         |         |  | 41,135  |           |  |  | +4.4 |     
|                                                                 |       |         |         |         |         |  |         |           | 
|                                                                 | Total |         |         | 258,543 |         |  |         | 244,074   |  |  |      | +5.9 | 
|                                                                 |       |         |         |         |         |  |         |           | 






|    |                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excluding physically-settled electricity trading activities at
    EST. ESTs physically-settled electricity trading
    activities amounted to 113,666 million KWh and
    110,914 million kWh in 2005 and 2004, respectively.



Western Europe


Power Generation


General.






29



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##### Table of Contents



start-up


E.ON ENERGIES ELECTRIC POWER STATIONS IN GERMANY AND
THE NETHERLANDS


|                      |       |          |       |                 |              |  |       |          |  |  |       |       |  |  |      |  | 
|--------------------- | ----- | -------- | ----- | --------------- | ------------ |  | ----- | -------- |  |  | ----- | ----- |  |  | ---- |  | 
|                      |       |          |       | Capacity        |              |  |      
|                      |       |          |       | Attributable to |              |  |      
|                      |       | Total    |       |                 | E.ON Energie |  |       |         
|                      |       | Capacity |       |                 |              |  |       | Start-up | 
|Power Plants          |       | Net MW   |       |                 | %(1)         |  |       | MW       |  |  | Date  |      
|                      |       |          |       |                 |              |  |       |          |  |  |       |      
|Nuclear               |       |          |       |                 |              |  |       |          |  |  |       |       |  |  |      | 
|Brokdorf              |       |          | 1,370 |                 |              |  | 80.0  |          |  |  | 1,096 |       |  |  | 1986 | 
|Brunsbüttel           |       |          | 771   |                 |              |  | 33.3  |          |  |  | 257   |       |  |  | 1976 | 
|Emsland               |       |          | 1,329 |                 |              |  | 12.5  |          |  |  | 166   |       |  |  | 1988 | 
|Grafenrheinfeld       |       |          | 1,275 |                 |              |  | 100.0 |          |  |  | 1,275 |       |  |  | 1981 | 
|Grohnde               |       |          | 1,360 |                 |              |  | 83.3  |          |  |  | 1,133 |       |  |  | 1984 | 
|Gundremmingen B       |       |          | 1,284 |                 |              |  | 25.0  |          |  |  | 321   |       |  |  | 1984 | 
|Gundremmingen C       |       |          | 1,288 |                 |              |  | 25.0  |          |  |  | 322   |       |  |  | 1984 | 
|Isar 1                |       |          | 878   |                 |              |  | 100.0 |          |  |  | 878   |       |  |  | 1977 | 
|Isar 2                |       |          | 1,400 |                 |              |  | 75.0  |          |  |  | 1,050 |       |  |  | 1988 | 
|Krümmel               |       |          | 1,260 |                 |              |  | 50.0  |          |  |  | 630   |       |  |  | 1983 | 
|Unterweser            |       |          | 1,345 |                 |              |  | 100.0 |          |  |  | 1,345 |       |  |  | 1978 | 
|                      |       |          |       |                 |              |  |       |          |  |  |       |      
|                      | Total |          |       | 13,560          |              |  |       |          |  |  |       | 8,473 |  |  |      |  | 
|                      |       |          |       |                 |              |  |       |          |  |  |       |      
|Lignite               |       |          |       |                 |              |  |       |          |  |  |       |       |  |  |      | 
|Buschhaus             |       |          | 350   |                 |              |  | 100.0 |          |  |  | 350   |       |  |  | 1985 | 
|Kassel                |       |          | 33    |                 |              |  | 50.0  |          |  |  | 17    |       |  |  | 1988 | 
|Lippendorf S          |       |          | 891   |                 |              |  | 50.0  |          |  |  | 446   |       |  |  | 1999 | 
|Schkopau              |       |          | 900   |                 |              |  | 55.6  |          |  |  | 500   |       |  |  | 1995 | 
|                      |       |          |       |                 |              |  |       |          |  |  |       |      
|                      | Total |          |       | 2,174           |              |  |       |          |  |  |       | 1,313 |  |  |      |  | 
|                      |       |          |       |                 |              |  |       |          |  |  |       |      
|Hard Coal             |       |          |       |                 |              |  |       |          |  |  |       |       |  |  |      | 
|Bexbach 1             |       |          | 714   |                 |              |  | 8.3   |          |  |  | 59    |       |  |  | 1983 | 
|Buer (CHP)            |       |          | 70    |                 |              |  | 100.0 |          |  |  | 70    |       |  |  | 1985 | 
|Datteln 1             |       |          | 95    |                 |              |  | 100.0 |          |  |  | 95    |       |  |  | 1964 | 
|Datteln 2             |       |          | 95    |                 |              |  | 100.0 |          |  |  | 95    |       |  |  | 1964 | 
|Datteln 3             |       |          | 113   |                 |              |  | 100.0 |          |  |  | 113   |       |  |  | 1969 | 
|Farge                 |       |          | 345   |                 |              |  | 100.0 |          |  |  | 345   |       |  |  | 1969 | 
|GKW Weser/ Veltheim 2 |       |          | 93    |                 |              |  | 67.0  |          |  |  | 62    |       |  |  | 1965 | 
|GKW Weser/ Veltheim 3 |       |          | 303   |                 |              |  | 67.0  |          |  |  | 203   |       |  |  | 1970 | 
|Heyden                |       |          | 865   |                 |              |  | 100.0 |          |  |  | 865   |       |  |  | 1987 | 
|Kiel                  |       |          | 323   |                 |              |  | 50.0  |          |  |  | 162   |       |  |  | 1970 | 
|Knepper C             |       |          | 345   |                 |              |  | 100.0 |          |  |  | 345   |       |  |  | 1971 | 
|Maasvlakte 1 (NL)(2)  |       |          | 532   |                 |              |  | 100.0 |          |  |  | 532   |       |  |  | 1988 | 
|Maasvlakte 2 (NL)(2)  |       |          | 520   |                 |              |  | 100.0 |          |  |  | 520   |       |  |  | 1987 | 
|Mehrum C              |       |          | 690   |                 |              |  | 50.0  |          |  |  | 345   |       |  |  | 1979 | 
|Rostock               |       |          | 508   |                 |              |  | 50.4  |          |  |  | 256   |       |  |  | 1994 | 
|Scholven B            |       |          | 345   |                 |              |  | 100.0 |          |  |  | 345   |       |  |  | 1968 | 

30



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##### Table of Contents



|                                  |       |          |     |                 |              |  |       |          |  |  |      |       |  |  |      |  | 
|--------------------------------- | ----- | -------- | --- | --------------- | ------------ |  | ----- | -------- |  |  | ---- | ----- |  |  | ---- |  | 
|                                  |       |          |     | Capacity        |              |  |      
|                                  |       |          |     | Attributable to |              |  |      
|                                  |       | Total    |     |                 | E.ON Energie |  |       |         
|                                  |       | Capacity |     |                 |              |  |       | Start-up | 
|Power Plants                      |       | Net MW   |     |                 | %(1)         |  |       | MW       |  |  | Date |      
|                                  |       |          |     |                 |              |  |       |          |  |  |      |      
|Hard Coal (continued)             |       |          |     |                 |              |  |       |          |  |  |      |       |  |  |      | 
|Scholven C                        |       |          | 345 |                 |              |  | 100.0 |          |  |  | 345  |       |  |  | 1969 | 
|Scholven D                        |       |          | 345 |                 |              |  | 100.0 |          |  |  | 345  |       |  |  | 1970 | 
|Scholven E                        |       |          | 345 |                 |              |  | 100.0 |          |  |  | 345  |       |  |  | 1971 | 
|Scholven F                        |       |          | 676 |                 |              |  | 100.0 |          |  |  | 676  |       |  |  | 1979 | 
|Shamrock                          |       |          | 132 |                 |              |  | 100.0 |          |  |  | 132  |       |  |  | 1957 | 
|Staudinger 1                      |       |          | 249 |                 |              |  | 100.0 |          |  |  | 249  |       |  |  | 1965 | 
|Staudinger 3                      |       |          | 293 |                 |              |  | 100.0 |          |  |  | 293  |       |  |  | 1970 | 
|Staudinger 5                      |       |          | 510 |                 |              |  | 100.0 |          |  |  | 510  |       |  |  | 1992 | 
|Wilhelmshaven                     |       |          | 747 |                 |              |  | 100.0 |          |  |  | 747  |       |  |  | 1976 | 
|Zolling                           |       |          | 449 |                 |              |  | 100.0 |          |  |  | 449  |       |  |  | 1986 | 
|                                  |       |          |     |                 |              |  |       |          |  |  |      |      
|                                  | Total |          |     | 10,047          |              |  |       |          |  |  |      | 8,503 |  |  |      |  | 
|                                  |       |          |     |                 |              |  |       |          |  |  |      |      
|Natural Gas                       |       |          |     |                 |              |  |       |          |  |  |      |       |  |  |      | 
|Burghausen                        |       |          | 120 |                 |              |  | 100.0 |          |  |  | 120  |       |  |  | 2001 | 
|Emden GT                          |       |          | 52  |                 |              |  | 100.0 |          |  |  | 52   |       |  |  | 1972 | 
|Erfurt                            |       |          | 80  |                 |              |  | 27.8  |          |  |  | 22   |       |  |  |     | 
|Franken I/1                       |       |          | 383 |                 |              |  | 100.0 |          |  |  | 383  |       |  |  | 1973 | 
|Franken I/2                       |       |          | 440 |                 |              |  | 100.0 |          |  |  | 440  |       |  |  | 1976 | 
|Galileistraat (NL)                |       |          | 209 |                 |              |  | 100.0 |          |  |  | 209  |       |  |  | 1988 | 
|Gendorf                           |       |          | 40  |                 |              |  | 50.0  |          |  |  | 20   |       |  |  | 2002 | 
|GKW Weser/ Veltheim 4 GT          |       |          | 400 |                 |              |  | 74.0  |          |  |  | 296  |       |  |  | 1975 | 
|Grenzach-Wyhlen                   |       |          | 40  |                 |              |  | 69.9  |          |  |  | 28   |       |  |  | 2004 | 
|GT Ummeln                         |       |          | 55  |                 |              |  | 74.0  |          |  |  | 41   |       |  |  | 1973 | 
|Huntorf                           |       |          | 290 |                 |              |  | 100.0 |          |  |  | 290  |       |  |  | 1977 | 
|Irsching 3                        |       |          | 415 |                 |              |  | 100.0 |          |  |  | 415  |       |  |  | 1974 | 
|Jena-Süd                          |       |          | 199 |                 |              |  | 62.6  |          |  |  | 125  |       |  |  | 1996 | 
|Kirchlengern                      |       |          | 180 |                 |              |  | 62.9  |          |  |  | 113  |       |  |  | 1980 | 
|Kirchmöser                        |       |          | 178 |                 |              |  | 100.0 |          |  |  | 178  |       |  |  | 1994 | 
|Leiden (NL)                       |       |          | 83  |                 |              |  | 100.0 |          |  |  | 83   |       |  |  | 1986 | 
|Maasvlakte UCML (NL)              |       |          | 78  |                 |              |  | 100.0 |          |  |  | 78   |       |  |  | 2004 | 
|Obernburg                         |       |          | 100 |                 |              |  | 50.0  |          |  |  | 50   |       |  |  | 1995 | 
|Robert Frank 4                    |       |          | 487 |                 |              |  | 100.0 |          |  |  | 487  |       |  |  | 1973 | 
|RoCa 3 (NL)(2)                    |       |          | 220 |                 |              |  | 100.0 |          |  |  | 220  |       |  |  | 1996 | 
|Staudinger 4                      |       |          | 622 |                 |              |  | 100.0 |          |  |  | 622  |       |  |  | 1977 | 
|The Hague (NL)                    |       |          | 78  |                 |              |  | 100.0 |          |  |  | 78   |       |  |  | 1982 | 
|Other (<40 MW installed capacity) |       |          | 283 |                 |              |  | n/a   |          |  |  | 253  |       |  |  | n/a  | 
|                                  |       |          |     |                 |              |  |       |          |  |  |      |      
|                                  | Total |          |     | 5,032           |              |  |       |          |  |  |      | 4,603 |  |  |      |  | 
|                                  |       |          |     |                 |              |  |       |          |  |  |      |      
|Fuel Oil                          |       |          |     |                 |              |  |       |          |  |  |      |       |  |  |      | 
|Audorf                            |       |          | 87  |                 |              |  | 100.0 |          |  |  | 87   |       |  |  | 1973 | 
|Hausham GT 1                      |       |          | 25  |                 |              |  | 100.0 |          |  |  | 25   |       |  |  | 1982 | 
|Hausham GT 2                      |       |          | 25  |                 |              |  | 100.0 |          |  |  | 25   |       |  |  | 1982 | 

31



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##### Table of Contents



|                     |       |          |     |                 |              |  |       |          |  |  |      |       |  |  |      |  | 
|-------------------- | ----- | -------- | --- | --------------- | ------------ |  | ----- | -------- |  |  | ---- | ----- |  |  | ---- |  | 
|                     |       |          |     | Capacity        |              |  |      
|                     |       |          |     | Attributable to |              |  |      
|                     |       | Total    |     |                 | E.ON Energie |  |       |         
|                     |       | Capacity |     |                 |              |  |       | Start-up | 
|Power Plants         |       | Net MW   |     |                 | %(1)         |  |       | MW       |  |  | Date |      
|                     |       |          |     |                 |              |  |       |          |  |  |      |      
|Fuel Oil (continued) |       |          |     |                 |              |  |       |          |  |  |      |       |  |  |      | 
|Hausham GT 3         |       |          | 25  |                 |              |  | 100.0 |          |  |  | 25   |       |  |  | 1982 | 
|Hausham GT 4         |       |          | 25  |                 |              |  | 100.0 |          |  |  | 25   |       |  |  | 1982 | 
|Ingolstadt 3         |       |          | 386 |                 |              |  | 100.0 |          |  |  | 386  |       |  |  | 1973 | 
|Ingolstadt 4         |       |          | 386 |                 |              |  | 100.0 |          |  |  | 386  |       |  |  | 1974 | 
|Itzehoe              |       |          | 88  |                 |              |  | 100.0 |          |  |  | 88   |       |  |  | 1972 | 
|Wilhelmshaven        |       |          | 56  |                 |              |  | 100.0 |          |  |  | 56   |       |  |  | 1973 | 
|Zolling GT 1         |       |          | 25  |                 |              |  | 100.0 |          |  |  | 25   |       |  |  | 1976 | 
|Zolling GT 2         |       |          | 25  |                 |              |  | 100.0 |          |  |  | 25   |       |  |  | 1976 | 
|                     |       |          |     |                 |              |  |       |          |  |  |      |      
|                     | Total |          |     | 1,153           |              |  |       |          |  |  |      | 1,153 |  |  |      |  | 
|                     |       |          |     |                 |              |  |       |          |  |  |      |      
|Hydroelectric        |       |          |     |                 |              |  |       |          |  |  |      |       |  |  |      | 
|Aufkirchen           |       |          | 27  |                 |              |  | 100.0 |          |  |  | 27   |       |  |  | 1924 | 
|Bittenbrunn          |       |          | 20  |                 |              |  | 100.0 |          |  |  | 20   |       |  |  | 1969 | 
|Bergheim             |       |          | 24  |                 |              |  | 100.0 |          |  |  | 24   |       |  |  | 1970 | 
|Braunau-Simbach      |       |          | 100 |                 |              |  | 50.0  |          |  |  | 50   |       |  |  | 1953 | 
|Egglfing             |       |          | 81  |                 |              |  | 100.0 |          |  |  | 81   |       |  |  | 1944 | 
|Eitting              |       |          | 26  |                 |              |  | 100.0 |          |  |  | 26   |       |  |  | 1925 | 
|Ering                |       |          | 73  |                 |              |  | 100.0 |          |  |  | 73   |       |  |  | 1942 | 
|Erzhausen            |       |          | 220 |                 |              |  | 100.0 |          |  |  | 220  |       |  |  | 1964 | 
|Feldkirchen          |       |          | 38  |                 |              |  | 100.0 |          |  |  | 38   |       |  |  | 1970 | 
|Gars                 |       |          | 25  |                 |              |  | 100.0 |          |  |  | 25   |       |  |  | 1938 | 
|Geisling             |       |          | 25  |                 |              |  | 100.0 |          |  |  | 25   |       |  |  | 1985 | 
|Happurg              |       |          | 160 |                 |              |  | 100.0 |          |  |  | 160  |       |  |  | 1958 | 
|Hemfurth             |       |          | 20  |                 |              |  | 100.0 |          |  |  | 20   |       |  |  | 1915 | 
|Jochenstein          |       |          | 132 |                 |              |  | 50.0  |          |  |  | 66   |       |  |  | 1955 | 
|Kachlet              |       |          | 54  |                 |              |  | 100.0 |          |  |  | 54   |       |  |  | 1927 | 
|Langenprozelten      |       |          | 164 |                 |              |  | 100.0 |          |  |  | 164  |       |  |  | 1975 | 
|Neuötting            |       |          | 26  |                 |              |  | 100.0 |          |  |  | 26   |       |  |  | 1951 | 
|Nußdorf              |       |          | 48  |                 |              |  | 76.5  |          |  |  | 37   |       |  |  | 1982 | 
|Oberaudorf-Ebbs      |       |          | 60  |                 |              |  | 50.0  |          |  |  | 30   |       |  |  | 1992 | 
|Passau-Ingling       |       |          | 86  |                 |              |  | 50.0  |          |  |  | 43   |       |  |  | 1965 | 
|Pfrombach            |       |          | 22  |                 |              |  | 100.0 |          |  |  | 22   |       |  |  | 1929 | 
|Reisach              |       |          | 105 |                 |              |  | 100.0 |          |  |  | 105  |       |  |  | 1955 | 
|Rosenheim            |       |          | 35  |                 |              |  | 100.0 |          |  |  | 35   |       |  |  | 1960 | 
|Roßhaupten           |       |          | 46  |                 |              |  | 100.0 |          |  |  | 46   |       |  |  | 1954 | 
|Schärding-Neuhaus    |       |          | 96  |                 |              |  | 50.0  |          |  |  | 48   |       |  |  | 1961 | 
|Stammham             |       |          | 23  |                 |              |  | 100.0 |          |  |  | 23   |       |  |  | 1955 | 
|Straubing            |       |          | 22  |                 |              |  | 100.0 |          |  |  | 22   |       |  |  | 1994 | 
|Tanzmühle            |       |          | 28  |                 |              |  | 100.0 |          |  |  | 28   |       |  |  | 1959 | 
|Teufelsbruck         |       |          | 25  |                 |              |  | 100.0 |          |  |  | 25   |       |  |  | 1938 | 
|Töging               |       |          | 85  |                 |              |  | 100.0 |          |  |  | 85   |       |  |  | 1924 | 
|Vohburg              |       |          | 23  |                 |              |  | 100.0 |          |  |  | 23   |       |  |  | 1992 | 

32



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|                                             |       |          |        |                 |              |  |       |          |  |  |        |       |  |  |      |  | 
|-------------------------------------------- | ----- | -------- | ------ | --------------- | ------------ |  | ----- | -------- |  |  | ------ | ----- |  |  | ---- |  | 
|                                             |       |          |        | Capacity        |              |  |      
|                                             |       |          |        | Attributable to |              |  |      
|                                             |       | Total    |        |                 | E.ON Energie |  |       |         
|                                             |       | Capacity |        |                 |              |  |       | Start-up | 
|Power Plants                                 |       | Net MW   |        |                 | %(1)         |  |       | MW       |  |  | Date   |      
|                                             |       |          |        |                 |              |  |       |          |  |  |        |      
|Hydroelectric (continued)                    |       |          |        |                 |              |  |       |          |  |  |        |       |  |  |      | 
|Walchensee                                   |       |          | 124    |                 |              |  | 100.0 |          |  |  | 124    |       |  |  | 1924 | 
|Waldeck 1                                    |       |          | 120    |                 |              |  | 100.0 |          |  |  | 120    |       |  |  | 1931 | 
|Waldeck 2                                    |       |          | 440    |                 |              |  | 100.0 |          |  |  | 440    |       |  |  | 1975 | 
|Wasserburg                                   |       |          | 24     |                 |              |  | 100.0 |          |  |  | 24     |       |  |  | 1938 | 
|Other run-of-river, pump storage and storage |       |          | 781    |                 |              |  | n/a   |          |  |  | 734    |       |  |  | n/a  | 
|                                             |       |          |        |                 |              |  |       |          |  |  |        |      
|                                             | Total |          |        | 3,408           |              |  |       |          |  |  |        | 3,113 |  |  |      |  | 
|                                             |       |          |        |                 |              |  |       |          |  |  |        |      
|Others                                       |       |          | 537    |                 |              |  |       |          |  |  | 333    |       |  |  |      | 
|                                             |       |          |        |                 |              |  |       |          |  |  |        |      
|Total                                        |       |          | 35,911 |                 |              |  |       |          |  |  | 27.491 |       |  |  |      | 
|                                             |       |          |        |                 |              |  |       |          |  |  |        |      
|Mothballed/ Shutdown/ Reduced                |       |          |        |                 |              |  |       |          |  |  |        |       |  |  |      | 
|Arzberg 5(3)                                 |       |          | 104    |                 |              |  | 100.0 |          |  |  | 104    |       |  |  | 1966 | 
|Arzberg 6(3)                                 |       |          | 252    |                 |              |  | 100.0 |          |  |  | 252    |       |  |  | 1974 | 
|Arzberg 7(3)                                 |       |          | 121    |                 |              |  | 100.0 |          |  |  | 121    |       |  |  | 1979 | 
|Aschaffenburg 21(3)                          |       |          | 150    |                 |              |  | 100.0 |          |  |  | 150    |       |  |  | 1963 | 
|Aschaffenburg 31(3)                          |       |          | 143    |                 |              |  | 100.0 |          |  |  | 143    |       |  |  | 1971 | 
|Emden 4(4)                                   |       |          | 433    |                 |              |  | 100.0 |          |  |  | 433    |       |  |  | 1972 | 
|Franken II/1(3)                              |       |          | 206    |                 |              |  | 100.0 |          |  |  | 206    |       |  |  | 1966 | 
|Franken II/2(3)                              |       |          | 206    |                 |              |  | 100.0 |          |  |  | 206    |       |  |  | 1967 | 
|Irsching 1                                   |       |          | 151    |                 |              |  | 100.0 |          |  |  | 151    |       |  |  | 1969 | 
|Irsching 2                                   |       |          | 312    |                 |              |  | 100.0 |          |  |  | 312    |       |  |  | 1972 | 
|Offleben(3)                                  |       |          | 280    |                 |              |  | 100.0 |          |  |  | 280    |       |  |  | 1988 | 
|Pleinting 1                                  |       |          | 292    |                 |              |  | 100.0 |          |  |  | 292    |       |  |  | 1968 | 
|Pleinting 2                                  |       |          | 402    |                 |              |  | 100.0 |          |  |  | 402    |       |  |  | 1976 | 
|Rauxel 2(3)                                  |       |          | 164    |                 |              |  | 100.0 |          |  |  | 164    |       |  |  | 1967 | 
|Scholven G(3)                                |       |          | 672    |                 |              |  | 50.0  |          |  |  | 336    |       |  |  | 1974 | 
|Scholven H(3)                                |       |          | 672    |                 |              |  | 50.0  |          |  |  | 336    |       |  |  | 1975 | 
|Schwandorf B(3)                              |       |          | 99     |                 |              |  | 100.0 |          |  |  | 99     |       |  |  | 1959 | 
|Schwandorf C(3)                              |       |          | 99     |                 |              |  | 100.0 |          |  |  | 99     |       |  |  | 1961 | 
|Schwandorf D(3)                              |       |          | 292    |                 |              |  | 100.0 |          |  |  | 292    |       |  |  | 1972 | 
|Stade(3)                                     |       |          | 640    |                 |              |  | 66.7  |          |  |  | 417    |       |  |  | 1972 | 
|Staudinger 2                                 |       |          | 249    |                 |              |  | 100.0 |          |  |  | 249    |       |  |  | 1965 | 
|Westerholt 1(3)                              |       |          | 138    |                 |              |  | 100.0 |          |  |  | 138    |       |  |  | 1959 | 
|Westerholt 2(3)                              |       |          | 138    |                 |              |  | 100.0 |          |  |  | 138    |       |  |  | 1961 | 
|                                             |       |          |        |                 |              |  |       |          |  |  |        |      
|                                             | Total |          |        | 6,215           |              |  |       |          |  |  |        | 5,320 |  |  |      |  | 
|                                             |       |          |        |                 |              |  |       |          |  |  |        |      






|    |                                                                                             
|--- | --------------------------------------------------------------------------------------------
|(1) | Percentage of total capacity attributable to E.ON Energie.                                  
|   
|(2) | Power station operated by E.ON Benelux under long-term
    cross-border leasing arrangement.
|   
|(3) | Dismantling in process or finished, respectively.                                           
|   
|(4) | Recommissioned in January 2006.                                                             





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Germany.


Nuclear Power.


      


(Endlager-Vorausleistungsverordnung)






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


(Bündnis 90/ Die Grünen) Atomgesetz,






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Nuclear Phase-out: The operators of the nuclear plants
    have agreed to a specified number of operating kWh for each
    nuclear plant. This number has been calculated on the basis of
    32 years of plant operation using a high load factor. The
    operators may trade allotted kWh among themselves. This means
    that if one nuclear plant closes before it has produced the
    allotted amount of kWh, the remaining kWh may be transferred to
    another nuclear power plant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Termination of Fuel Reprocessing: The transport of spent
    fuel elements for reprocessing was allowed until June 30,
    2005. Following this deadline, the operators must store spent
    fuel in interim facilities on the premises of the nuclear
    plants. Such storage requires the approval and construction of
    interim storage facilities. The Company is currently
    constructing five interim
    on-site storage
    facilities, of which two are expected to go into operation in
    the first quarter of 2006, with the remaining three scheduled to
    be ready between November 2006 and February 2007. For the period
    from July 2005 until storage can begin in the interim storage
    facilities, the Company is storing the spent fuel elements at
    the plants in so-called in-plant fuel pools. The Company expects
    the capacity of these fuel pools to be sufficient to store the
    spent fuel elements until the storage facilities go into
    operation. E.ON has delivered all spent fuel elements under its
    reprocessing contracts with Cogema and BNGS.





Steuerentlastungsgesetz 1999/2000/2002




| |   |                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The accrual period for decommissioning costs has been extended
    from 19 to 25 years. This requires E.ON Energie to release
    a portion of the provisions it had previously established for
    tax purposes based on the shorter accrual period.                                  
|
| |  | Certain parts of the provisions concerning MOX fuel elements
    have to be reversed. The costs must be capitalized as incurred
    instead.                                                                                                                                           
|
| |  | Those portions of the provisions that have been established in
    past years relating to the financing and operational costs for
    final storage of nuclear waste have been disallowed. The costs
    of these items will now be tax-deductible when they are actually
    expensed.
|
| |  | In accordance with the new general rule for long-term
    provisions, all types of provisions for nuclear power must now
    be discounted. The Tax Relief Act sets the discount rate at
    5.5 percent. This also applies                                                            

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| |  |                                                                                                                                    
| |  | -----------------------------------------------------------------------------------------------------------------------------------
| |  | to provisions that have previously been established, which must
    be released to the extent they do not reflect this discounting.





(Steuersenkungsgesetz)


Hard Coal.


Lignite.


Gas and Oil.


Water. run-of


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back-up


Waste Incineration.






Transmission


2






Distribution and Sale




37



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Electricity.









|                                                                        |          |         |         |         |         |  |         |          |  |  |      |      | 
|----------------------------------------------------------------------- | -------- | ------- | ------- | ------- | ------- |  | ------- | -------- |  |  | ---- | ---- | 
|                                                                        |          | Germany |         |         | Germany |  |         |         
|                                                                        |          | 2005    |         |         | 2004    |  |         | %        | 
|                                                                        |          | million |         |         | million |  |         | Change   | 
|Sale of Power to                                                        |          | kWh     |         |         | kWh     |  |         | in Total | 
|                                                                        |          |         |         |         |         |  |         |          | 
|Non-consolidated interregional, regional and municipal
    utilities(1) |          |         | 116,654 |         |         |  | 112,575 |          |  |  | +3.6 |     
|Industrial and commercial customers(2)(3)                               |          |         | 59,134  |         |         |  | 56,274  |          |  |  | +5.1 |     
|Residential and small commercial customers                              |          |         | 29,978  |         |         |  | 30,352  |          |  |  | -1.2 |     
|                                                                        |          |         |         |         |         |  |         |          | 
|                                                                        | Total(3) |         |         | 205,766 |         |  |         | 199,201  |  |  |      | +3.3 | 
|                                                                        |          |         |         |         |         |  |         |          | 






|    |                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The sale of power to non-consolidated interregional, regional
    and municipal utilities increased in 2005 compared with 2004,
    reflecting increased sales of electricity produced from
    renewable resources.
|   
|(2) | The sale of power to industrial and commercial customers
    increased in 2005 compared with 2004, primarily due to
    additional customers acquired.                                                              
|   
|(3) | The sale of power includes sales of EST in other European
    countries.                                                                                                                                            

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Gas.


Heat.


Water.


Customers.


39



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Trading


2 2 2








|                 |       |         |         |         |         |  |         |          |  |  |       |      | 
|---------------- | ----- | ------- | ------- | ------- | ------- |  | ------- | -------- |  |  | ----- | ---- | 
|                 |       | 2005    |         |         | 2004    |  |         | %        | 
|                 |       | million |         |         | million |  |         | Change   | 
|Trading of Power |       | kWh     |         |         | kWh     |  |         | in Total | 
|                 |       |         |         |         |         |  |         |          | 
|Power sold       |       |         | 164,109 |         |         |  | 146,755 |          |  |  | +11.8 |     
|Power purchased  |       |         | 168,734 |         |         |  | 162,671 |          |  |  | +3.7  |     
|                 |       |         |         |         |         |  |         |          | 
|                 | Total |         |         | 332,843 |         |  |         | 309,426  |  |  |       | +7.6 | 
|                 |       |         |         |         |         |  |         |          | 

Other


Consulting and Support Services. 2


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Other Minority Shareholdings.




| |               
| | --------------
| | Eastern Europe











41



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Competitive
Environment






2




42



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PAN-EUROPEAN GAS


Overview


    






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In November 2004, ERI signed an agreement for the acquisition of
    75.0 percent minus one share each of the gas trading and
    gas storage businesses of the Hungarian oil and gas company MOL
    and its 50.0 percent interest in the gas import subsidiary
    Panrusgáz. In addition, MOL received a put option to sell
    to ERI up to 75.0 percent minus one share of its gas
    transmission business and put options to sell to ERI the
    remaining 25.0 percent plus one share in the MOL gas
    trading and gas storage businesses. As a condition of antitrust
    approval by the EU commission, MOL is obliged to sell the
    remaining 25.0 percent plus one share of the gas trading
    and storage businesses as well. As a result, ERI signed an
    agreement for the acquisition of the remaining 25.0 percent
    plus one share of each of the two companies. These transactions
    are expected to be completed at the end of March 2006.
|
| |  | In June 2005, after clearance was obtained from the relevant
    authorities, E.ON Ruhrgas acquired a 51.0 percent stake in
    the Romanian gas supplier Distrigaz Nord from the Romanian
    government. Distrigaz Nord is active in gas distribution and
    supply in northern Romania.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In June 2005, E.ON Ruhrgas signed an agreement for the sale of
    Ruhrgas Industries to CVC Capital Partners.                                                                                                                                                                                                                                                                                                                                                       
|
| |  | In September 2005, E.ON Ruhrgas Norge AS (E.ON Ruhrgas
    Norge) acquired an additional 15.0 percent stake in
    the Njord oil and gas field from the British oil and gas company
    Paladin Resources plc. and now owns a 30.0 percent stake in
    this field.                                                                                                                                                                                                
|
| |  | In September 2005, Gazprom, BASF and E.ON signed a basic
    agreement on the construction of the NEGP.                                                                                                                                                                                                                                                                                                                                                            
|
| |  | In November 2005, E.ON Ruhrgas acquired Caledonia, a U.K. gas
    production company with interests in a total of 15 gas fields in
    the U.K. southern North Sea, from First Reserve, CSFB Private
    Equity Funds and others. Apart from its stakes in gas fields,
    Caledonia wholly owns Caledonia Energy Trading Limited
    (CETL) and has interests in two pipeline systems
    near the gas fields for transporting gas to the United Kingdom.         
|
| |  | In the course of 2005, E.ON Ruhrgas UK Exploration and
    Production Limited (E.ON Ruhrgas UK) acquired a
    further 13.59 percent stake in Interconnector (U.K.)
    Limited (Interconnector) from BP plc.
    (BP) (4.0 percent), International Power plc
    (International Power) (3.38 percent) and
    Amerada Hess Corporation (Amerada Hess)
    (6.21 percent). E.ON Ruhrgas UK now holds a total interest
    of 23.59 percent in this company.



Operations




|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Supply:       |  | The purchase of natural gas under long-term contracts with
    foreign and domestic producers, including the Russian gas
    company Gazprom, the worlds largest gas producer in terms
    of volume, in which E.ON Ruhrgas holds a small shareholding.
    E.ON Ruhrgas also engages in gas exploration and production
    activities and, to supplement its supply as well as its sales
    business, in a limited amount of trading activities;
|             
|Transmission: |  | The transmission of gas within Germany via a network of
    approximately 11,000 km of pipelines in which E.ON Ruhrgas holds
    an interest;                                                                                                                                                                                                                                                                                                      
|             
|Storage:      |  | The storage of gas in a number of large underground natural gas
    storage facilities; and                                                                                                                                                                                                                                                                                                                                                        
|             
|Sales:        |  | The sale of gas within Germany to regional and supraregional
    distributors, municipal utilities and industrial customers, as
    well as the delivery of gas to a number of customers in other
    European countries.                                                                                                                                                                                                                          





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.




|               |       |             |       |       |   |  |            |             |  |  |       |       |  |  |      |       | 
|-------------- | ----- | ----------- | ----- | ----- | - |  | ---------- | ----------- |  |  | ----- | ----- |  |  | ---- | ----- | 
|               |       | Total 2005  |       |       |   |  | Total 2004 |             |  | 
|Purchases      |       | billion kWh |       |       | % |  |            | billion kWh |  |  | %     |      
|               |       |             |       |       |   |  |            |             |  |  |       |      
|Imports        |       |             | 580.0 |       |   |  | 84.5       |             |  |  | 537.4 |       |  |  | 83.2 |      
|German sources |       |             | 106.1 |       |   |  | 15.5       |             |  |  | 108.6 |       |  |  | 16.8 |      
|               |       |             |       |       |   |  |            |             |  |  |       |      
|               | Total |             |       | 686.1 |   |  |            | 100.0       |  |  |       | 646.0 |  |  |      | 100.0 | 
|               |       |             |       |       |   |  |            |             |  |  |       |      

|                              |       |  |       |       |  |  |      |       |  |  |       |       |  |  |      |       | 
|----------------------------- | ----- |  | ----- | ----- |  |  | ---- | ----- |  |  | ----- | ----- |  |  | ---- | ----- | 
|Sales                         |       |  |       |       |  |  |      |      
|                              |       |  |       |       |  |  |      |      
|Domestic distributors         |       |  | 323.7 |       |  |  | 46.9 |       |  |  | 328.7 |       |  |  | 51.2 |      
|Domestic municipal utilities  |       |  | 160.9 |       |  |  | 23.3 |       |  |  | 156.1 |       |  |  | 24.3 |      
|Domestic industrial customers |       |  | 70.4  |       |  |  | 10.2 |       |  |  | 69.0  |       |  |  | 10.8 |      
|Sales abroad                  |       |  | 135.2 |       |  |  | 19.6 |       |  |  | 87.6  |       |  |  | 13.7 |      
|                              |       |  |       |       |  |  |      |       |  |  |       |      
|                              | Total |  |       | 690.2 |  |  |      | 100.0 |  |  |       | 641.4 |  |  |      | 100.0 | 
|                              |       |  |       |       |  |  |      |       |  |  |       |      





Supply




|                |       |             |       |       |   |  |            |             |  |  |       |       |  |  |      |       | 
|--------------- | ----- | ----------- | ----- | ----- | - |  | ---------- | ----------- |  |  | ----- | ----- |  |  | ---- | ----- | 
|                |       | Total 2005  |       |       |   |  | Total 2004 |             |  | 
|Sources of Gas  |       | billion kWh |       |       | % |  |            | billion kWh |  |  | %     |      
|                |       |             |       |       |   |  |            |             |  |  |       |      
|Germany         |       |             | 106.1 |       |   |  | 15.5       |             |  |  | 108.6 |       |  |  | 16.8 |      
|Russia          |       |             | 193.5 |       |   |  | 28.2       |             |  |  | 201.3 |       |  |  | 31.2 |      
|Norway          |       |             | 188.4 |       |   |  | 27.5       |             |  |  | 169.6 |       |  |  | 26.3 |      
|The Netherlands |       |             | 139.0 |       |   |  | 20.2       |             |  |  | 124.1 |       |  |  | 19.2 |      
|United Kingdom  |       |             | 34.1  |       |   |  | 5.0        |             |  |  | 22.8  |       |  |  | 3.5  |      
|Denmark         |       |             | 23.7  |       |   |  | 3.4        |             |  |  | 19.3  |       |  |  | 3.0  |      
|Others(1)       |       |             | 1.3   |       |   |  | 0.2        |             |  |  | 0.3   |       |  |  | 0.0  |      
|                |       |             |       |       |   |  |            |             |  |  |       |      
|                | Total |             |       | 686.1 |   |  |            | 100.0       |  |  |       | 646.0 |  |  |      | 100.0 | 
|                |       |             |       |       |   |  |            |             |  |  |       |      






|    |                  
|--- | -----------------
|(1) | Italy and France.

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force majeure






Russia.




46



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Norway.


The Netherlands.


Germany.


United Kingdom.




Denmark.


47



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Trading








Exploration and Production




United Kingdom.


3 3 3


Norway.


Russia.


Liquefied Natural Gas


3 3


48



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


Transmission and
Storage






|                                                                                  |  |               |       | 
|--------------------------------------------------------------------------------- |  | ------------- | ----- | 
|                                                                                  |  | E.ON          |      
|                                                                                  |  | Ruhrgas Share |      
|Project Company                                                                   |  | %             |      
|                                                                                  |  |               |      
|DEUDAN (DEUDAN  Deutsch/ Dänische
    Erdgastransport-Gesellschaft mbH & Co. KG) |  |               | 25.0  | 
|EGL (Etzel Gas-Lager GmbH & Co. KG)                                               |  |               | 74.8  | 
|GHG (GHG-Gasspeicher Hannover Gesellschaft mbH)                                   |  |               | 13.2  | 
|MEGAL (MEGAL Mittel-Europäische-Gasleitungsgesellschaft
    mbH & Co. KG)         |  |               | 51.0  | 
|METG (Mittelrheinische Erdgastransportleitungsgesellschaft mbH)                   |  |               | 100.0 | 
|NETG (Nordrheinische Erdgastransportleitungsgesellschaft
    mbH & Co. KG)        |  |               | 50.0  | 
|NETRA (NETRA GmbH Norddeutsche Erdgas Transversale &
    Co. KG)                  |  |               | 40.6  | 
|TENP (Trans Europa Naturgas Pipeline Gesellschaft mbH &
    Co. KG)               |  |               | 51.0  | 





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E.ON Ruhrgas Technical Infrastructure







Pipelines.




|                                                                                         |                  |       |       |            |                 |  |       |        | 
|---------------------------------------------------------------------------------------- | ---------------- | ----- | ----- | ---------- | --------------- |  | ----- | ------ | 
|                                                                                         |                  |       |       | Maintained |                
|                                                                                         |                  | Total |       |            | by E.ON Ruhrgas | 
|Pipelines                                                                                |                  | km    |       |            | km              | 
|                                                                                         |                  |       |       |            |                 | 
|Owned by E.ON Ruhrgas                                                                    |                  |       | 6,449 |            |                 |  | 6,177 |       
|Co-owned pipelines                                                                       |                  |       | 1,550 |            |                 |  | 604   |       
|DEUDAN (PC)                                                                              |                  |       | 110   |            |                 |  | 0     |       
|EGL (PC)                                                                                 |                  |       | 67    |            |                 |  | 67    |       
|MEGAL (PC)                                                                               |                  |       | 1,080 |            |                 |  | 1,080 |       
|METG (PC)                                                                                |                  |       | 425   |            |                 |  | 425   |       
|NETG (PC)                                                                                |                  |       | 285   |            |                 |  | 144   |       
|NETRA (PC)                                                                               |                  |       | 341   |            |                 |  | 106   |       
|TENP (PC)                                                                                |                  |       | 966   |            |                 |  | 966   |       
|Companies in which E.ON Ruhrgas holds a stake through its
    subsidiaries ERI and Thüga |                  |       |      |            |                 |  | 2,046 |       
|Owned by third parties                                                                   |                  |       |      |            |                 |  | 1,075 |       
|                                                                                         |                  |       |       |            |                 | 
|                                                                                         | Total in Germany |       |       | 11,273     |                 |  |       | 12,690 | 
|                                                                                         |                  |       |       |            |                 | 






|     |                
|---- | ---------------
|(PC) | project company

50



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 


Compressor Stations.


51



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|                                          |                  |            |    |    |            |                 |    |                  |               |                     |               |            |  |                 |    |    |  |  |     |     | 
|----------------------------------------- | ---------------- | ---------- | -- | -- | ---------- | --------------- | -- | ---------------- | ------------- | ------------------- | ------------- | ---------- |  | --------------- | -- | -- |  |  | --- | --- | 
|                                          |                  |            |    |    |            |                 |    |                  |               | Installed Capacity  |              
|                                          |                  |            |    |    |            |                 |    |                  |               | of Compressor Units |              
|                                          |                  |            |    |    |            |                 |    | Compressor Units |               |                     | Monitored and |           
|                                          |                  |            |    |    |            | Total Installed |    |                  | Monitored and |                     |               | Maintained | 
|                                          |                  | Compressor |    |    | Compressor |                 |    | Capacity         |               |                     | Maintained by |            |  | by E.ON Ruhrgas |   
|Owned by                                  |                  | Stations   |    |    | Units      |                 |    | MW               |               |                     | E.ON Ruhrgas  |            |  | MW              |   
|                                          |                  |            |    |    |            |                 |    |                  |               |                     |               |            |  |                 |   
|E.ON Ruhrgas (transportation and storage) |                  |            | 15 |    |            |                 | 44 |                  |               |                     | 384           |            |  |                 | 44 |    |  |  | 384 |    
|DEUDAN (PC) (transportation)              |                  |            | 2  |    |            |                 | 4  |                  |               |                     | 16            |            |  |                 | 0  |    |  |  | 0   |    
|EGL (PC) (storage)                        |                  |            | 1  |    |            |                 | 2  |                  |               |                     | 13            |            |  |                 | 0  |    |  |  | 0   |    
|GHG Hannover (PC) (storage)               |                  |            | 1  |    |            |                 | 3  |                  |               |                     | 4             |            |  |                 | 0  |    |  |  | 0   |    
|MEGAL (PC) (transportation)               |                  |            | 5  |    |            |                 | 17 |                  |               |                     | 179           |            |  |                 | 17 |    |  |  | 179 |    
|METG (PC) (transportation)                |                  |            | 2  |    |            |                 | 9  |                  |               |                     | 99            |            |  |                 | 9  |    |  |  | 99  |    
|NETG (PC) (transportation)                |                  |            | 2  |    |            |                 | 5  |                  |               |                     | 50            |            |  |                 | 2  |    |  |  | 20  |    
|NETRA (PC) (transportation)               |                  |            | 2  |    |            |                 | 5  |                  |               |                     | 42            |            |  |                 | 3  |    |  |  | 20  |    
|TENP (PC) (transportation)                |                  |            | 4  |    |            |                 | 15 |                  |               |                     | 151           |            |  |                 | 15 |    |  |  | 151 |    
|                                          |                  |            |    |    |            |                 |    |                  |               |                     |               |            |  |                 |   
|                                          | Total in Germany |            |    | 34 |            |                 |    | 104              |               |                     |               | 938        |  |                 |    | 90 |  |  |     | 853 | 
|                                          |                  |            |    |    |            |                 |    |                  |               |                     |               |            |  |                 |   






|     |                
|---- | ---------------
|(PC) | project company



Storage. 3


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|                               |       |               |       |               |                |  |       |          |               |                            |  |  |             |     |  |  |     |     | 
|------------------------------ | ----- | ------------- | ----- | ------------- | -------------- |  | ----- | -------- | ------------- | -------------------------- |  |  | ----------- | --- |  |  | --- | --- | 
|                               |       |               |       | E.ON Ruhrgas |                |  |       |          | E.ON Ruhrgas |                            |  | 
|                               |       | E.ON Ruhrgas |       |               | Share in       |  |       |          |               | Share in                   |  |  |            
|                               |       | Share in      |       |               | Maximum        |  |       |          |               | Storage Facility           |  |  |            
|                               |       | Working       |       |               | Withdrawal     |  |       |          |               | or in the                  |  |  | Operated by |    
|                               |       | Capacity      |       |               | Rate (thousand |  |       |          |               | Project Company            |  |  | E.ON        |    
|Underground Storage Facilities |       | (million m3)  |       |               | m3/hour)       |  |       | Owned by |               | %                          |  |  | Ruhrgas     |    
|                               |       |               |       |               |                |  |       |          |               |                            |  |  |             |    
|Bierwang(P)                    |       |               | 1,300 |               |                |  | 1,200 |          |               | E.ON Ruhrgas               |  |  | 100.0       |     |  |  | Yes |    
|Empelde(C)                     |       |               | 18    |               |                |  | 39    |          |               | GHG-Gasspeicher Hannover   |  |  |             |     |  |  |     |    
|                               |       |               |       |               |                |  |       |          |               | Gesellschaft mbH(PC)       |  |  | 13.2        |     |  |  |    |    
|Epe(C)                         |       |               | 1,657 |               |                |  | 2,450 |          |               | E.ON Ruhrgas               |  |  | 100.0       |     |  |  | Yes |    
|Eschenfelden(P)                |       |               | 48    |               |                |  | 87    |          |               | E.ON Ruhrgas/N-ERGIE AG    |  |  | 66.7        |     |  |  | Yes |    
|Etzel(C)                       |       |               | 383   |               |                |  | 987   |          |               | Etzel Gas-Lager GmbH &     |  |  |             |     |  |  |     |    
|                               |       |               |       |               |                |  |       |          |               | Co. KG(PC)                 |  |  | 74.8        |     |  |  |    |    
|Hähnlein(P)                    |       |               | 80    |               |                |  | 100   |          |               | E.ON Ruhrgas               |  |  | 100.0       |     |  |  | Yes |    
|Krummhörn(C)(1)                |       |               | 0     |               |                |  | 0     |          |               | E.ON Ruhrgas               |  |  | 100.0       |     |  |  | Yes |    
|Sandhausen(P)                  |       |               | 15    |               |                |  | 23    |          |               | E.ON Ruhrgas/Gasversorgung |  |  |             |     |  |  |     |    
|                               |       |               |       |               |                |  |       |          |               | Süddeutschland GmbH        |  |  | 50.0        |     |  |  | Yes |    
|Stockstadt(P)                  |       |               | 135   |               |                |  | 135   |          |               | E.ON Ruhrgas               |  |  | 100.0       |     |  |  | Yes |    
|Breitbrunn(P)                  |       |               | 970   | (2)           |                |  | 520   |          |               | RWE Dea AG/ExxonMobil      |  |  |             |     |  |  |     |    
|                               |       |               |       |               |                |  |       |          |               | Gasspeicher Deutschland    |  |  |             |     |  |  |     |    
|                               |       |               |       |               |                |  |       |          |               | GmbH(3)/ E.ON Ruhrgas (4)  |  |  | Leased      | (3) |  |  | Yes | (4)
|Inzenham-West(P)               |       |               | 500   |               |                |  | 300   |          |               | RWE Dea AG                 |  |  | Leased      |     |  |  |    |    
|                               |       |               |       |               |                |  |       |          |               |                            |  |  |             |    
|                               | Total |               |       | 5,106         |                |  |       | 5,841    |               |                            |  |  |             |     |  |  |     |     | 
|                               |       |               |       |               |                |  |       |          |               |                            |  |  |             |    






|    |            
|--- | -----------
|(C) | salt cavern



|    |  |            
|--- |  | -----------
|(P) |  | porous rock



|     |                
|---- | ---------------
|(PC) | project company



|    |                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Currently out of service for repairs/adjustments.                                                                                                    
|   
|(2) | 965 million
    m3
    was contractually guaranteed in 2004/05; 970 million
    m3
    is the current working gas capacity available to E.ON Ruhrgas.
|   
|(3) | Underground section.                                                                                                                                 



|    |                                                                
|--- | ---------------------------------------------------------------
|(4) | Above ground part, particularly the storage compressor station.

Monitoring and Maintenance.




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E.ON Ruhrgas Transport.






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Sales


Germany.







|                     |       |             |       |       |   |  |            |             |  |  |       |       |  |  |      |       | 
|-------------------- | ----- | ----------- | ----- | ----- | - |  | ---------- | ----------- |  |  | ----- | ----- |  |  | ---- | ----- | 
|                     |       | Total 2005  |       |       |   |  | Total 2004 |             |  | 
|Sale of Gas to:      |       | billion kWh |       |       | % |  |            | billion kWh |  |  | %     |      
|                     |       |             |       |       |   |  |            |             |  |  |       |      
|Distributors         |       |             | 323.7 |       |   |  | 58.3       |             |  |  | 328.7 |       |  |  | 59.3 |      
|Municipal utilities  |       |             | 160.9 |       |   |  | 29.0       |             |  |  | 156.1 |       |  |  | 28.2 |      
|Industrial customers |       |             | 70.4  |       |   |  | 12.7       |             |  |  | 69.0  |       |  |  | 12.5 |      
|                     |       |             |       |       |   |  |            |             |  |  |       |      
|                     | Total |             |       | 555.0 |   |  |            | 100.0       |  |  |       | 553.8 |  |  |      | 100.0 | 
|                     |       |             |       |       |   |  |            |             |  |  |       |      





55



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International.


Downstream
Shareholdings






ERI: 




56



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Germany.


|                           |  |            |       | 
|-------------------------- |  | ---------- | ----- | 
|                           |  | Share held |      
|                           |  | by ERI     |      
|Shareholding               |  | %          |      
|                           |  |            |      
|Ferngas Nordbayern GmbH(1) |  |            | 53.10 | 
|Gas-Union GmbH(1)          |  |            | 25.93 | 
|Saar Ferngas AG(1)         |  |            | 20.00 | 






|    |                                                                      
|--- | ---------------------------------------------------------------------
|(1) | Interest held via ERIs wholly-owned subsidiary RGE Holding
    GmbH.



International.


|                                                            |  |            |        | 
|----------------------------------------------------------- |  | ---------- | ------ | 
|                                                            |  | Share held |       
|                                                            |  | by ERI     |       
|Shareholding                                                |  | %          |       
|                                                            |  |            |       
|Gasnor AS, Norway                                           |  |            | 14.00  | 
|Nova Naturgas AB, Sweden                                    |  |            | 29.59  | 
|Gasum Oy, Finland                                           |  |            | 20.00  | 
|AS Eesti Gaas, Estonia                                      |  |            | 33.66  | 
|JSC Latvijas Gaze, Latvia                                   |  |            | 47.23  | 
|AB Lietuvos Dujos, Lithuania                                |  |            | 38.91  | 
|therminvest Sp.z o.o., Poland(1)                            |  |            | 100.00 | 
|Inwestycyjna Spolka Energetyczna Sp.z o.o. (IRB), Poland    |  |            | 50.00  | 
|Szczencinska Energetyka Cieplna Sp.z o.o. (SECS), Poland(1) |  |            | 32.13  | 
|EUROPGAS a.s., Czech Republic(2)                            |  |            | 50.00  | 
|Colonia-Cluj-Napoca-Energie S.R.L. (CCNE), Romania          |  |            | 33.33  | 
|E.ON Ruhrgas Mittel- und Osteuropa GmbH(3)                  |  |            | 100.00 | 
|Nafta a.s., Slovakia                                        |  |            | 40.27  | 
|S.C. Congaz S.A., Romania                                   |  |            | 28.59  | 
|Ekopur d.o.o., Slovenia(4)                                  |  |            | 100.00 | 
|SOTEG  Société de Transport de Gaz S.A.,
    Luxembourg    |  |            | 20.00  | 
|Holdigaz SA, Switzerland                                    |  |            | 2.21   | 






|    |                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The shareholdings in these companies are expected to be
    transferred to E.DIS energia sp.z o.o. of the Central Europe
    market unit in 2006.
|   
|(2) | EUROPGAS a.s. holds 50.0 percent of SPP Bohemia a.s. and
    48.18 percent of Moravské naftové doly a.s.
    (MND) in the Czech Republic.        
|   
|(3) | E.ON Ruhrgas Mittel- und Osteuropa GmbH has an indirect interest
    of 24.50 percent in SPP, Slovakia.                                          
|   
|(4) | Ekopur d.o.o. holds 6.52 percent of Geoplin d.o.o. in
    Slovenia.                                                                              



Thüga:


57



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






Germany.


|                                           |  |            |       | 
|------------------------------------------ |  | ---------- | ----- | 
|                                           |  | Share held |      
|                                           |  | by Thüga   |      
|Shareholding                               |  | %          |      
|                                           |  |            |      
|Stadtwerke Hannover Aktiengesellschaft     |  |            | 24.00 | 
|N-ERGIE Aktiengesellschaft                 |  |            | 39.80 | 
|Mainova Aktiengesellschaft                 |  |            | 24.44 | 
|Gasag Berliner Gaswerke Aktiengesellschaft |  |            | 36.85 | 
|badenova AG & Co. KG                       |  |            | 47.30 | 
|HEAG Südhessische Energie AG (HSE)         |  |            | 40.01 | 
|DREWAG-Stadtwerke Dresden GmbH             |  |            | 10.00 | 
|Erdgas Südbayern GmbH                      |  |            | 50.00 | 
|Stadtwerke Duisburg AG                     |  |            | 20.00 | 
|Stadtwerke Karlsruhe GmbH                  |  |            | 10.00 | 

International.


|                                 |  |            |        | 
|-------------------------------- |  | ---------- | ------ | 
|                                 |  | Share held |       
|                                 |  | by Thüga   |       
|Shareholding                     |  | %          |       
|                                 |  |            |       
|E.ON Vendita S.r.l               |  |            | 100.00 | 
|Thüga Laghi S.r.l                |  |            | 100.00 | 
|Thüga Mediterranea S.r.l         |  |            | 100.00 | 
|Thüga Orobica S.r.l              |  |            | 100.00 | 
|Thüga Padana S.r.l               |  |            | 100.00 | 
|Thüga Triveneto S.r.l            |  |            | 100.00 | 
|G.E.I. S.p.A.                    |  |            | 48.94  | 
|AMGA Azienda Multiservizi S.p.A. |  |            | 21.60  | 

Competitive
Environment




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 


Bundeskartellamt


59



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U.K.


Overview


 


Operations










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|                                                                                               |                       |             |        |             |        |        |     
|---------------------------------------------------------------------------------------------- | --------------------- | ----------- | ------ | ----------- | ------ | ------ | ----
|                                                                                               |                       | Total       |        | Total       |        |       
|                                                                                               |                       | 2005        |        | 2004        |        | %     
|Sources of Power                                                                               |                       | million kWh |        | million kWh |        | Change
|                                                                                               |                       |             |        |             |        |       
|Own production(1)                                                                              |                       | 37,255      |        | 34,916      |        | +6.7  
|Purchased power from power stations in which E.ON UK has an
    interest of 50 percent or less |                       | 627         |        | 2,047       |        | -69.4 
|Power purchased from other suppliers(2)                                                        |                       | 39,224      |        | 47,087      |        | -16.7 
|Power used for operating purposes, network losses and pump
    storage                         |                       | (2,114)     |        | (1,976)     |        | +7.0  
|                                                                                               |                       |             |        |             |        |       
|                                                                                               | Net power supplied(3) |             | 74,992 |             | 82,074 |        | -8.6
|                                                                                               |                       |             |        |             |        |       

|                                                                                     |                   |        |        |        |        |       |     
|------------------------------------------------------------------------------------ | ----------------- | ------ | ------ | ------ | ------ | ----- | ----
|Sales of Power                                                                       |                   |        |        |        |        |      
|                                                                                     |                   |        |        |        |        |      
|Mass market sales (residential customers and small and medium
    sized enterprises) |                   | 37,314 |        | 36,189 |        | +3.1 
|Industrial and commercial sales(4)                                                   |                   | 22,301 |        | 26,528 |        | -15.9
|Market sales(2)                                                                      |                   | 15,377 |        | 19,357 |        | -20.6
|                                                                                     |                   |        |        |        |        |      
|                                                                                     | Net power sold(3) |        | 74,992 |        | 82,074 |       | -8.6
|                                                                                     |                   |        |        |        |        |      






|    |                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The increase in own production in 2005 was primarily
    attributable to the fact that the Killingholme power plant was
    returned to service and the Enfield power station was acquired
    in 2005.                                          
|   
|(2) | Power purchased from other suppliers and market sales decreased
    in 2005 compared with 2004 primarily due to lower sales to
    industrial and commercial customers and optimization decisions
    associated with E.ON UKs hedging strategy.
|   
|(3) | Excluding proprietary trading volumes. For information on
    proprietary trading volumes, see  Energy
    Wholesale  Energy Trading.                                                                                                        
|   
|(4) | During 2005, the industrial and commercial sales business
    continued to focus on securing profitable customers, which
    resulted in lower sales volumes in 2005 compared with 2004.                                                         



|                               |                       |             |         |             |         |        |     
|------------------------------ | --------------------- | ----------- | ------- | ----------- | ------- | ------ | ----
|                               |                       | Total       |         | Total       |         |       
|                               |                       | 2005        |         | 2004        |         | %     
|Sources of Gas                 |                       | million kWh |         | million kWh |         | Change
|                               |                       |             |         |             |         |       
|Long-term gas supply contracts |                       | 48,431      |         | 49,494      |         | -2.1  
|Market purchases               |                       | 134,041     |         | 126,400     |         | +6.0  
|                               |                       |             |         |             |         |       
|                               | Total gas supplied(1) |             | 182,472 |             | 175,894 |        | +3.7
|                               |                       |             |         |             |         |       

|                                                |                            |        |         |        |         |       |     
|----------------------------------------------- | -------------------------- | ------ | ------- | ------ | ------- | ----- | ----
|Sale and Use of Gas                             |                            |        |         |        |         |      
|                                                |                            |        |         |        |         |      
|Gas used for own generation                     |                            | 40,318 |         | 39,023 |         | +3.3 
|Sales to industrial and commercial customers(2) |                            | 32,590 |         | 35,946 |         | -9.3 
|Sales to retail mass market customers           |                            | 67,671 |         | 66,221 |         | +2.2 
|Market sales                                    |                            | 41,893 |         | 34,704 |         | +20.7
|                                                |                            |        |         |        |         |      
|                                                | Total gas used and sold(1) |        | 182,472 |        | 175,894 |       | +3.7
|                                                |                            |        |         |        |         |      






|    |                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excluding proprietary trading volumes. For information on
    proprietary trading volumes, see  Energy
    Wholesale  Energy Trading.

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|    |                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | During 2005, the industrial and commercial sales business
    continued to focus on securing profitable customers, which
    resulted in lower sales volumes in 2005 compared with 2004.

Market Environment




Electricity.










2


Natural Gas.


Competition.


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Impact of Environmental Measures.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The U.K.s renewables obligation required electricity
    retailers to source an increasing amount of the electricity they
    supply to retail customers from renewable sources. Under the
    current regime, for the period from April 1, 2005 until
    March 31, 2006, the renewables obligation is equal to
    5.5 percent, rising to a figure of 15.4 percent by
    2015/2016, at which point it is to remain stable until 2026/27.
    The requirement applies to all retail sales over a twelve-month
    period beginning on April 1 of each year, and Renewables
    Obligation Certificates (ROCs) are issued to
    generators as evidence of qualified sourcing. ROCs are
    tradeable, and retailers who fail to present Ofgem with ROCs
    representing the full amount of their renewables obligation are
    required to make a balancing payment in the amount of any
    shortfall into a buy-out fund. Receipts from the buy-out fund
    are re-distributed to holders of ROCs.
|
| |  | The United Kingdom implemented the EU Emissions Trading
    Directive at the beginning of 2005. The scheme requires
    companies to have
    CO2
    emission certificates in an amount equal to the
    CO2
    emissions made by their fossil fuel-fired power plants with a
    thermal input of more than 20 MW. During 2005, the U.K.
    government made an initial allocation of certificates for the
    first phase of the scheme (2005 to 2007) to owners of generating
    facilities, with the total number of certificates being issued
    equal to less than 90 percent of emissions levels in recent
    years. As a result, E.ON UK had to buy 4.7 million tons of
    additional allowances in 2005.                                                                                                                                                                                                                                                                                    
|
| |  | The application in the United Kingdom of the EU Large Combustion
    Plant Directive may prevent coal- and oil-powered generation
    facilities that have not been fitted with specified sulphur
    oxide and nitrous oxide reduction measures from operating for
    more than a total of 20,000 hours starting in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



Non-regulated Business


Energy Wholesale




Power Generation




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start-up


E.ON UK ELECTRIC POWER STATIONS


|                                       |       |          |     |                 |   |  |              |    |  |          |      |       |  |  |      |  | 
|-------------------------------------- | ----- | -------- | --- | --------------- | - |  | ------------ | -- |  | -------- | ---- | ----- |  |  | ---- |  | 
|                                       |       |          |     | E.ON UKs Share |   |  |             
|                                       |       |          |     |                 |   |  |             
|                                       |       | Total    |     |                 |   |  | Attributable |    |  |         
|                                       |       | Capacity |     |                 |   |  | Capacity     |    |  | Start-up |     
|Power Plants                           |       | Net MW   |     |                 | % |  |              | MW |  |          | Date |      
|                                       |       |          |     |                 |   |  |              |    |  |          |      |      
|Hard Coal                              |       |          |     |                 |   |  |              |    |  |          |      |       |  |  |      | 
|Ironbridge U1(1)                       |       |          | 485 |                 |   |  | 100.0        |    |  |          | 485  |       |  |  | 1970 | 
|Ironbridge U2(1)                       |       |          | 485 |                 |   |  | 100.0        |    |  |          | 485  |       |  |  | 1970 | 
|Kingsnorth U1(1)                       |       |          | 485 |                 |   |  | 100.0        |    |  |          | 485  |       |  |  | 1970 | 
|Kingsnorth U2(1)                       |       |          | 485 |                 |   |  | 100.0        |    |  |          | 485  |       |  |  | 1971 | 
|Kingsnorth U3(1)                       |       |          | 485 |                 |   |  | 100.0        |    |  |          | 485  |       |  |  | 1972 | 
|Kingsnorth U4(1)                       |       |          | 485 |                 |   |  | 100.0        |    |  |          | 485  |       |  |  | 1973 | 
|Ratcliffe U1(1)(2)                     |       |          | 500 |                 |   |  | 100.0        |    |  |          | 500  |       |  |  | 1968 | 
|Ratcliffe U2(1)(2)                     |       |          | 500 |                 |   |  | 100.0        |    |  |          | 500  |       |  |  | 1969 | 
|Ratcliffe U3(1)(2)                     |       |          | 500 |                 |   |  | 100.0        |    |  |          | 500  |       |  |  | 1969 | 
|Ratcliffe U4(1)(2)                     |       |          | 500 |                 |   |  | 100.0        |    |  |          | 500  |       |  |  | 1970 | 
|                                       |       |          |     |                 |   |  |              |    |  |          |      |      
|                                       | Total |          |     | 4,910           |   |  |              |    |  |          |      | 4,910 |  |  |      |  | 
|                                       |       |          |     |                 |   |  |              |    |  |          |      |      
|Natural Gas                            |       |          |     |                 |   |  |              |    |  |          |      |       |  |  |      | 
|Cottam Development Centre (CDC) Module |       |          | 400 |                 |   |  | 100.0        |    |  |          | 400  |       |  |  | 1999 | 
|Connahs Quay U1                        |       |          | 345 |                 |   |  | 100.0        |    |  |          | 345  |       |  |  | 1996 | 
|Connahs Quay U2                        |       |          | 345 |                 |   |  | 100.0        |    |  |          | 345  |       |  |  | 1996 | 
|Connahs Quay U3                        |       |          | 345 |                 |   |  | 100.0        |    |  |          | 345  |       |  |  | 1996 | 
|Connahs Quay U4                        |       |          | 345 |                 |   |  | 100.0        |    |  |          | 345  |       |  |  | 1996 | 
|Corby Module                           |       |          | 401 |                 |   |  | 50.0         |    |  |          | 200  |       |  |  | 1993 | 
|Enfield                                |       |          | 392 |                 |   |  | 100.0        |    |  |          | 392  |       |  |  | 2002 | 
|Killingholme Mod 1                     |       |          | 450 |                 |   |  | 100.0        |    |  |          | 450  |       |  |  | 1992 | 
|Killingholme Mod 2                     |       |          | 450 |                 |   |  | 100.0        |    |  |          | 450  |       |  |  | 1993 | 
|                                       |       |          |     |                 |   |  |              |    |  |          |      |      
|                                       | Total |          |     | 3,473           |   |  |              |    |  |          |      | 3,272 |  |  |      |  | 
|                                       |       |          |     |                 |   |  |              |    |  |          |      |      
|Oil                                    |       |          |     |                 |   |  |              |    |  |          |      |       |  |  |      | 
|Grain U1                               |       |          | 650 |                 |   |  | 100.0        |    |  |          | 650  |       |  |  | 1982 | 
|Grain U4                               |       |          | 650 |                 |   |  | 100.0        |    |  |          | 650  |       |  |  | 1984 | 
|                                       |       |          |     |                 |   |  |              |    |  |          |      |      
|                                       | Total |          |     | 1,300           |   |  |              |    |  |          |      | 1,300 |  |  |      |  | 
|                                       |       |          |     |                 |   |  |              |    |  |          |      |      

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|                                               |       |          |        |                 |   |  |              |    |  |          |        |     |  |  |         |  | 
|---------------------------------------------- | ----- | -------- | ------ | --------------- | - |  | ------------ | -- |  | -------- | ------ | --- |  |  | ------- |  | 
|                                               |       |          |        | E.ON UKs Share |   |  |             
|                                               |       |          |        |                 |   |  |             
|                                               |       | Total    |        |                 |   |  | Attributable |    |  |         
|                                               |       | Capacity |        |                 |   |  | Capacity     |    |  | Start-up |       
|Power Plants                                   |       | Net MW   |        |                 | % |  |              | MW |  |          | Date   |    
|                                               |       |          |        |                 |   |  |              |    |  |          |        |    
|Other (including hydroelectric and wind farms) |       |          |        |                 |   |  |              |    |  |          |        |     |  |  |         | 
|Grain Aux GT1                                  |       |          | 28     |                 |   |  | 100.0        |    |  |          | 28     |     |  |  | 1979    | 
|Grain Aux GT4                                  |       |          | 27     |                 |   |  | 100.0        |    |  |          | 27     |     |  |  | 1980    | 
|Kingsnorth Aux GT1                             |       |          | 17     |                 |   |  | 100.0        |    |  |          | 17     |     |  |  | 1967    | 
|Kingsnorth Aux GT4                             |       |          | 17     |                 |   |  | 100.0        |    |  |          | 17     |     |  |  | 1968    | 
|Ratcliffe Aux GT2                              |       |          | 17     |                 |   |  | 100.0        |    |  |          | 17     |     |  |  | 1967    | 
|Ratcliffe Aux GT4                              |       |          | 17     |                 |   |  | 100.0        |    |  |          | 17     |     |  |  | 1968    | 
|Taylors Lane GT2                               |       |          | 68     |                 |   |  | 100.0        |    |  |          | 68     |     |  |  | 1981    | 
|Taylors Lane GT3                               |       |          | 64     |                 |   |  | 100.0        |    |  |          | 64     |     |  |  | 1979    | 
|Hydroelectric                                  |       |          | 50     |                 |   |  | 100.0        |    |  |          | 50     |     |  |  | 1962    | 
|Wind farms                                     |       |          | 197    |                 |   |  | various      |    |  |          | 183    |     |  |  | various | 
|                                               |       |          |        |                 |   |  |              |    |  |          |        |    
|                                               | Total |          |        | 502             |   |  |              |    |  |          |        | 488 |  |  |         |  | 
|                                               |       |          |        |                 |   |  |              |    |  |          |        |    
|CHP schemes                                    |       |          | 577    |                 |   |  | 100.0        |    |  |          | 577    |     |  |  | various | 
|                                               |       |          |        |                 |   |  |              |    |  |          |        |    
|Total Capacity                                 |       |          | 10,762 |                 |   |  |              |    |  |          | 10,547 |     |  |  |         | 
|                                               |       |          |        |                 |   |  |              |    |  |          |        |    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Biomass material co-fired during 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(2) | In June 2005,
    Ratcliffe-on-Soar power
    station successfully completed an
    18-month trial to
    co-fire petcoke, a mixture of coal and gas. The trial was
    required by the U.K. Environmental Agency before permission
    could be given to move to commercial scale co-firing. A report
    on the trial has been submitted to the Environmental Agency,
    together with an application to move to commercial scale
    co-firing, and a decision is expected in 2006.



Nuclear.


Renewable Energy.








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CHP.


Energy Trading








| |   |                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Purchasing of coal, gas and oil for power stations;                                                                                                                                              
|
| |  | Dispatching generation and selling the electrical output and
    ancillary services provided by E.ON UKs power stations;                                                                        
|
| |  | Purchasing gas and electricity as required for E.ON UKs
    retail portfolio;                                                                                                                   
|
| |  | Managing the net position and risks of E.ON UKs generation
    and retail portfolio;                                                                                                            
|
| |  | Managing renewable obligations for the retail portfolio through
    long-term purchases and trading of ROCs;                                                                                     
|
| |  | Purchasing and/or trading of
    CO2
    emission certificates and other environmental products,
    including Levy Exempt Certificates (issued in relation to the
    U.K. Climate Change Levy);
|
| |  | Trading of weather derivatives, which assist in hedging volume
    variability in E.ON UKs retail business; and                                                                                 
|
| |  | Achieving portfolio optimization and risk management.                                                                                                                                            

2


|                            |  |                |      |  |             |  |      |                |  |  |             |  |  |  |       | 
|--------------------------- |  | -------------- | ---- |  | ----------- |  | ---- | -------------- |  |  | ----------- |  |  |  | ----- | 
|                            |  | 2005           |      |  | 2004        |  |      | 2005           |  |  | 2004        | 
|                            |  | Electricity    |      |  | Electricity |  |      | Gas            |  |  | Gas         | 
|Proprietary Trading Volumes |  | billion kWh(1) |      |  | billion kWh |  |      | billion kWh(1) |  |  | billion kWh | 
|                            |  |                |      |  |             |  |      |                |  |  |             | 
|Energy bought               |  |                | 10.4 |  |             |  | 20.9 |                |  |  | 36.2        |  |  |  | 86.55 | 
|Energy sold                 |  |                | 10.4 |  |             |  | 20.9 |                |  |  | 36.2        |  |  |  | 86.55 | 
|                            |  |                |      |  |             |  |      |                |  |  |             | 
|Gross volume                |  |                | 20.8 |  |             |  | 41.8 |                |  |  | 72.4        |  |  |  | 173.1 | 
|                            |  |                |      |  |             |  |      |                |  |  |             | 






|    |                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The reduction in traded gas and electricity volumes in 2005 was
    primarily attributable to higher market prices, which reduced
    the volume of trading E.ON UK could conduct within the risk
    limits established by the Corporate Center.

67



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over-the




over-the


Retail




Residential Customers. i.e.






68



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Small and Medium-Sized Business and Industrial and Commercial
Customers.




Other




Regulated Business


Distribution








|                                          |       |             |        |        |             |  |        |        |  |  |      |      | 
|----------------------------------------- | ----- | ----------- | ------ | ------ | ----------- |  | ------ | ------ |  |  | ---- | ---- | 
|                                          |       | Total       |        |        | Total       |  |        |       
|                                          |       | 2005        |        |        | 2004        |  |        | %      | 
|Distribution of Power to                  |       | million kWh |        |        | million kWh |  |        | Change | 
|                                          |       |             |        |        |             |  |        |        | 
|Large non-domestic customers              |       |             | 26,129 |        |             |  | 26,610 |        |  |  | -1.8 |     
|Domestic and small non-domestic customers |       |             | 31,287 |        |             |  | 30,583 |        |  |  | +2.3 |     
|                                          |       |             |        |        |             |  |        |        | 
|                                          | Total |             |        | 57,416 |             |  |        | 57,193 |  |  |      | +0.4 | 
|                                          |       |             |        |        |             |  |        |        | 



69



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Other


Midlands Electricity
Non-Distribution Assets







NORDIC


Overview




    


E.ON Sverige.







70



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




E.ON Finland.    







71



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##### Table of Contents



Operations






|                                                                       |       |             |        |             |        |        |     
|---------------------------------------------------------------------- | ----- | ----------- | ------ | ----------- | ------ | ------ | ----
|                                                                       |       | Total 2005  |        | Total 2004  |        | %     
|Sources of Power                                                       |       | million kWh |        | million kWh |        | Change
|                                                                       |       |             |        |             |        |       
|Own generation                                                         |       | 34,253      |        | 33,110      |        | +3.5  
|Purchased power from jointly owned power stations                      |       | 10,398      |        | 11,030      |        | -5.7  
|Power purchased from outside sources                                   |       | 5,921       |        | 7,376       |        | -19.7 
|                                                                       |       |             |        |             |        |       
|Total power procured(1)                                                |       | 50,572      |        | 51,516      |        | -1.8  
|Power used for operating purposes, network losses and pump
    storage |       | (2,001)     |        | (2,054)     |        | -2.6  
|                                                                       |       |             |        |             |        |       
|                                                                       | Total |             | 48,571 |             | 49,462 |        | -1.8
|                                                                       |       |             |        |             |        |       

|                            |          |        |        |        |        |      |     
|--------------------------- | -------- | ------ | ------ | ------ | ------ | ---- | ----
|Sales of Power              |          |        |        |        |        |     
|                            |          |        |        |        |        |     
|Residential customers       |          | 8,500  |        | 9,132  |        | -6.9
|Commercial customers        |          | 13,830 |        | 14,454 |        | -4.3
|Sales partners(2)/ Nordpool |          | 26,241 |        | 25,876 |        | +1.4
|                            |          |        |        |        |        |     
|                            | Total(1) |        | 48,571 |        | 49,462 |      | -1.8
|                            |          |        |        |        |        |     






|    |                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excluding physically-settled electricity trading activities.
    Nordics physically-settled electricity trading activities
    (including both purchases and sales) amounted to approximately
    44 million kWh in each of 2005 and 2004.
|   
|(2) | Sales partners are co-owners in E.ON Nordics
    majority-owned power plants, primarily nuclear power plants, to
    which E.ON Nordic sells electricity at prices equal to the cost
    of production.                                   





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|                               |                    |             |       |       |             |  |       |        |  |  |       |      | 
|------------------------------ | ------------------ | ----------- | ----- | ----- | ----------- |  | ----- | ------ |  |  | ----- | ---- | 
|                               |                    | Total 2005  |       |       | Total 2004  |  |       | %      | 
|Sources of Gas                 |                    | million kWh |       |       | million kWh |  |       | Change | 
|                               |                    |             |       |       |             |  |       |        | 
|Long-term gas supply contracts |                    |             | 9,310 |       |             |  | 9,252 |        |  |  | +0.6  |     
|Market purchases               |                    |             | 281   |       |             |  | 402   |        |  |  | -30.1 |     
|                               |                    |             |       |       |             |  |       |        | 
|                               | Total gas supplied |             |       | 9,591 |             |  |       | 9,654  |  |  |       | -0.7 | 
|                               |                    |             |       |       |             |  |       |        | 

|                                               |                         |  |       |       |  |  |       |       |  |  |       |      | 
|---------------------------------------------- | ----------------------- |  | ----- | ----- |  |  | ----- | ----- |  |  | ----- | ---- | 
|Sale and Use of Gas                            |                         |  |       |       |  | 
|                                               |                         |  |       |       |  | 
|Gas used for own generation                    |                         |  | 2,624 |       |  |  | 2,539 |       |  |  | +3.4  |     
|Sales to industrial and distribution customers |                         |  | 6,729 |       |  |  | 6,963 |       |  |  | -3.4  |     
|Sales to residential customers                 |                         |  | 238   |       |  |  | 152   |       |  |  | +56.6 |     
|Market sales                                   |                         |  | 0     |       |  |  | 0     |       |  |  |      |     
|                                               |                         |  |       |       |  |  |       |       | 
|                                               | Total gas used and sold |  |       | 9,591 |  |  |       | 9,654 |  |  |       | -0.7 | 
|                                               |                         |  |       |       |  |  |       |       | 



Market Environment


Electricity.






24-hour


73



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i.e.


2 2


i.e.










74



---



##### Table of Contents







Natural Gas.


District Heating.




Power Generation


General.






75



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start-up


E.ON NORDIC ELECTRIC POWER STATIONS


|                     |       |          |       |                     |   |  |              |    |  |          |      |       |  |  |      |  | 
|-------------------- | ----- | -------- | ----- | ------------------- | - |  | ------------ | -- |  | -------- | ---- | ----- |  |  | ---- |  | 
|                     |       |          |       | E.ON Sveriges/E.ON |   |  |             
|                     |       |          |       | Finlands Share     |   |  |             
|                     |       |          |       |                     |   |  |             
|                     |       | Total    |       |                     |   |  | Attributable |    |  |         
|                     |       | Capacity |       |                     |   |  | Capacity     |    |  | Start-up |     
|Power Plants         |       | Net MW   |       |                     | % |  |              | MW |  |          | Date |      
|                     |       |          |       |                     |   |  |              |    |  |          |      |      
|Nuclear              |       |          |       |                     |   |  |              |    |  |          |      |       |  |  |      | 
|Forsmark 1(S)        |       |          | 1,018 |                     |   |  | 9.3          |    |  |          | 95   |       |  |  | 1980 | 
|Forsmark 2(S)        |       |          | 951   |                     |   |  | 9.3          |    |  |          | 88   |       |  |  | 1981 | 
|Forsmark 3(S)        |       |          | 1,190 |                     |   |  | 10.8         |    |  |          | 129  |       |  |  | 1985 | 
|Oskarshamn I(S)      |       |          | 467   |                     |   |  | 54.5         |    |  |          | 255  |       |  |  | 1972 | 
|Oskarshamn II(S)     |       |          | 602   |                     |   |  | 54.5         |    |  |          | 328  |       |  |  | 1974 | 
|Oskarshamn III(S)    |       |          | 1,160 |                     |   |  | 54.5         |    |  |          | 632  |       |  |  | 1985 | 
|Ringhals 1(S)        |       |          | 873   |                     |   |  | 29.6         |    |  |          | 258  |       |  |  | 1976 | 
|Ringhals 2(S)        |       |          | 870   |                     |   |  | 29.6         |    |  |          | 258  |       |  |  | 1975 | 
|Ringhals 3(S)        |       |          | 920   |                     |   |  | 29.6         |    |  |          | 272  |       |  |  | 1981 | 
|Ringhals 4(S)        |       |          | 910   |                     |   |  | 29.6         |    |  |          | 269  |       |  |  | 1983 | 
|                     |       |          |       |                     |   |  |              |    |  |          |      |      
|                     | Total |          |       | 8,961               |   |  |              |    |  |          |      | 2,584 |  |  |      |  | 
|                     |       |          |       |                     |   |  |              |    |  |          |      |      
|Hydroelectric        |       |          |       |                     |   |  |              |    |  |          |      |       |  |  |      | 
|Balforsen(S)         |       |          | 88    |                     |   |  | 100.0        |    |  |          | 88   |       |  |  | 1958 | 
|Bergeforsen(S)       |       |          | 160   |                     |   |  | 44.0         |    |  |          | 70   |       |  |  | 1955 | 
|Bjurfors nedre(S)    |       |          | 78    |                     |   |  | 100.0        |    |  |          | 78   |       |  |  | 1959 | 
|Blasjön(S)           |       |          | 60    |                     |   |  | 50.0         |    |  |          | 30   |       |  |  | 1957 | 
|Degerforsen(S)       |       |          | 63    |                     |   |  | 100.0        |    |  |          | 63   |       |  |  | 1965 | 
|Edensforsen(S)       |       |          | 67    |                     |   |  | 96.5         |    |  |          | 65   |       |  |  | 1956 | 
|Edsele(S)            |       |          | 60    |                     |   |  | 100.0        |    |  |          | 60   |       |  |  | 1965 | 
|Forsse(S)            |       |          | 52    |                     |   |  | 100.0        |    |  |          | 52   |       |  |  | 1968 | 
|Gulsele(S)           |       |          | 64    |                     |   |  | 65.0         |    |  |          | 42   |       |  |  | 1955 | 
|Hällby(S)            |       |          | 84    |                     |   |  | 65.0         |    |  |          | 55   |       |  |  | 1970 | 
|Hammarforsen(S)      |       |          | 79    |                     |   |  | 100.0        |    |  |          | 79   |       |  |  | 1928 | 
|Harrsele(S)          |       |          | 223   |                     |   |  | 50.6         |    |  |          | 113  |       |  |  | 1957 | 
|Hjälta(S)            |       |          | 178   |                     |   |  | 100.0        |    |  |          | 178  |       |  |  | 1949 | 
|Järnvägsforsen(S)    |       |          | 100   |                     |   |  | 94.9         |    |  |          | 95   |       |  |  | 1975 | 
|Korselbränna(S)      |       |          | 130   |                     |   |  | 100.0        |    |  |          | 130  |       |  |  | 1961 | 
|Moforsen(S)          |       |          | 135   |                     |   |  | 100.0        |    |  |          | 135  |       |  |  | 1968 | 
|Olden (Langan)(S)    |       |          | 112   |                     |   |  | 100.0        |    |  |          | 112  |       |  |  | 1974 | 
|Pengfors(S)          |       |          | 52    |                     |   |  | 65.0         |    |  |          | 34   |       |  |  | 1954 | 
|Ramsele(S)           |       |          | 157   |                     |   |  | 100.0        |    |  |          | 157  |       |  |  | 1958 | 
|Rätan(S)             |       |          | 60    |                     |   |  | 100.0        |    |  |          | 60   |       |  |  | 1968 | 
|Sollefteaforsen(S)   |       |          | 61    |                     |   |  | 50.0         |    |  |          | 31   |       |  |  | Tba  | 
|Stensjön (Harkan)(S) |       |          | 95    |                     |   |  | 50.0         |    |  |          | 48   |       |  |  | 1968 | 
|Storfinnforsen(S)    |       |          | 112   |                     |   |  | 100.0        |    |  |          | 112  |       |  |  | 1953 | 

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|                                  |       |          |     |                     |   |  |              |    |  |          |      |       |  |  |           |  | 
|--------------------------------- | ----- | -------- | --- | ------------------- | - |  | ------------ | -- |  | -------- | ---- | ----- |  |  | --------- |  | 
|                                  |       |          |     | E.ON Sveriges/E.ON |   |  |             
|                                  |       |          |     | Finlands Share     |   |  |             
|                                  |       |          |     |                     |   |  |             
|                                  |       | Total    |     |                     |   |  | Attributable |    |  |         
|                                  |       | Capacity |     |                     |   |  | Capacity     |    |  | Start-up |     
|Power Plants                      |       | Net MW   |     |                     | % |  |              | MW |  |          | Date |      
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|Hydroelectric (continued)         |       |          |     |                     |   |  |              |    |  |          |      |       |  |  |           | 
|Trangfors(S)                      |       |          | 73  |                     |   |  | 100.0        |    |  |          | 73   |       |  |  | 1975      | 
|Other (<50 MW installed capacity) |       |          | 874 |                     |   |  | n/a          |    |  |          | 811  |       |  |  | n/a       | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|                                  | Total |          |     | 3,217               |   |  |              |    |  |          |      | 2,771 |  |  |           |  | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|Fuel Oil                          |       |          |     |                     |   |  |              |    |  |          |      |       |  |  |           | 
|Barsebäck GT(S)                   |       |          | 84  |                     |   |  | 100.0        |    |  |          | 84   |       |  |  | 1974      | 
|Bravalla(S)                       |       |          | 240 |                     |   |  | 100.0        |    |  |          | 240  |       |  |  | 1972      | 
|Halmstad G11(S)                   |       |          | 78  |                     |   |  | 100.0        |    |  |          | 78   |       |  |  | 1973      | 
|Halmstad G12(S)                   |       |          | 172 |                     |   |  | 100.0        |    |  |          | 172  |       |  |  | 1993      | 
|Karlshamn G1(S)                   |       |          | 332 |                     |   |  | 70.0         |    |  |          | 232  |       |  |  | 1971      | 
|Karlshamn G2(S)                   |       |          | 332 |                     |   |  | 70.0         |    |  |          | 232  |       |  |  | 1971      | 
|Karlshamn G3(S)                   |       |          | 326 |                     |   |  | 70.0         |    |  |          | 228  |       |  |  | 1973      | 
|Karskär G4(S)                     |       |          | 125 |                     |   |  | 50.0         |    |  |          | 63   |       |  |  | 1968      | 
|Öresundsverket GT(S)              |       |          | 126 |                     |   |  | 100.0        |    |  |          | 126  |       |  |  | 1971      | 
|Oskarshamn GT(S)                  |       |          | 80  |                     |   |  | 54.5         |    |  |          | 44   |       |  |  | 1973      | 
|Other (<50 MW installed capacity) |       |          | 100 |                     |   |  | n/a          |    |  |          | 64   |       |  |  | n/a       | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|                                  | Total |          |     | 1,995               |   |  |              |    |  |          |      | 1,563 |  |  |           |  | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|Natural Gas                       |       |          |     |                     |   |  |              |    |  |          |      |       |  |  |           | 
|Heleneholm G11, G12(S)(CHP)       |       |          | 130 |                     |   |  | 100.0        |    |  |          | 130  |       |  |  | 1966+1970 | 
|Suomenoja GT(1)(FIN)              |       |          | 50  |                     |   |  | 100.0        |    |  |          | 50   |       |  |  | 1989      | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|                                  | Total |          |     | 180                 |   |  |              |    |  |          |      | 180   |  |  |           |  | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|Hard Coal                         |       |          |     |                     |   |  |              |    |  |          |      |       |  |  |           | 
|Suomenoja(1)(FIN)                 |       |          | 80  |                     |   |  | 100.0        |    |  |          | 80   |       |  |  | 1977      | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|Wind Power                        |       |          |     |                     |   |  |              |    |  |          |      |       |  |  |           | 
|Sweden                            |       |          | 19  |                     |   |  | n/a          |    |  |          | 19   |       |  |  | n/a       | 
|Denmark                           |       |          | 166 |                     |   |  | n/a          |    |  |          | 33   |       |  |  | n/a       | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|                                  | Total |          |     | 185                 |   |  |              |    |  |          |      | 52    |  |  |           |  | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|Other Power Plants                |       |          |     |                     |   |  |              |    |  |          |      |       |  |  |           | 
|Abyverket G1, G2, G3(S)(CHP)      |       |          | 151 |                     |   |  | 100.0        |    |  |          | 151  |       |  |  | 1962-1974 | 
|Händelö (Norrköping)(S)(CHP)      |       |          | 100 |                     |   |  | 100.0        |    |  |          | 100  |       |  |  | 1983      | 
|Joensuu Bio(1)(FIN)               |       |          | 65  |                     |   |  | 100.0        |    |  |          | 65   |       |  |  | 1986      | 
|Karskär G3(S)                     |       |          | 48  |                     |   |  | 50.0         |    |  |          | 24   |       |  |  | 1968      | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|                                  | Total |          |     | 364                 |   |  |              |    |  |          |      | 340   |  |  |           |  | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|Shutdown                          |       |          |     |                     |   |  |              |    |  |          |      |       |  |  |           | 
|Barsebäck 1(S)(Nuclear)           |       |          |    |                     |   |  | 25.8         |    |  |          |     |       |  |  | 1975      | 
|Barsebäck 2(S)(Nuclear)           |       |          |    |                     |   |  | 25.8         |    |  |          |     |       |  |  | 1977      | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      
|                                  | Total |          |     | 14,982              |   |  |              |    |  |          |      | 7,570 |  |  |           |  | 
|                                  |       |          |     |                     |   |  |              |    |  |          |      |      

77



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|    |                             
|--- | ----------------------------
|(1) | Power plant of E.ON Finland.











Nuclear Power.










78



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##### Table of Contents






 




Hydroelectric.





Other Power Plants.






79



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##### Table of Contents



Electricity
Distribution
















80



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##### Table of Contents










Gas Distribution


3 3




Retail




Electricity.


81



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##### Table of Contents







Gas.






Heat & Waste. de minimis





Other Activities.


Trading


2






82



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|                 |       |         |        |         |         |  |        |          |  |  |       |      | 
|---------------- | ----- | ------- | ------ | ------- | ------- |  | ------ | -------- |  |  | ----- | ---- | 
|                 |       | 2005    |        |         | 2004    |  |        |         
|                 |       | million |        |         | million |  |        |         
|Trading of Power |       | kWh     |        |         | kWh     |  |        | % Change | 
|                 |       |         |        |         |         |  |        |          | 
|Power sold       |       |         | 53,503 |         |         |  | 56,758 |          |  |  | -5.7  |     
|Power purchased  |       |         | 56,225 |         |         |  | 48,764 |          |  |  | +15.3 |     
|                 |       |         |        |         |         |  |        |          | 
|                 | Total |         |        | 109,728 |         |  |        | 105,522  |  |  |       | +4.0 | 
|                 |       |         |        |         |         |  |        |          | 






U.S. MIDWEST


Overview


 


Operations










Market Environment




83



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Regulated Business


LG&E. 2


84



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##### Table of Contents



KU.


Power Generation


start-up


LG&ES AND KUS ELECTRIC POWER STATIONS


|                  |       |          |     |                   |   |  |              |    |  |          |      |       |  |  |      |  | 
|----------------- | ----- | -------- | --- | ----------------- | - |  | ------------ | -- |  | -------- | ---- | ----- |  |  | ---- |  | 
|                  |       |          |     | E.ON U.S.s Share |   |  |             
|                  |       |          |     |                   |   |  |             
|                  |       | Total    |     |                   |   |  | Attributable |    |  |         
|                  |       | Capacity |     |                   |   |  | Capacity     |    |  | Start-up |     
|Power Plants      |       | Net MW   |     |                   | % |  |              | MW |  |          | Date |      
|                  |       |          |     |                   |   |  |              |    |  |          |      |      
|Hard Coal         |       |          |     |                   |   |  |              |    |  |          |      |       |  |  |      | 
|Cane Run 4(1)     |       |          | 155 |                   |   |  | 100.0        |    |  |          | 155  |       |  |  | 1962 | 
|Cane Run 5(1)     |       |          | 168 |                   |   |  | 100.0        |    |  |          | 168  |       |  |  | 1966 | 
|Cane Run 6(1)     |       |          | 240 |                   |   |  | 100.0        |    |  |          | 240  |       |  |  | 1969 | 
|E.W. Brown 1(2)   |       |          | 101 |                   |   |  | 100.0        |    |  |          | 101  |       |  |  | 1957 | 
|E.W. Brown 2(2)   |       |          | 167 |                   |   |  | 100.0        |    |  |          | 167  |       |  |  | 1963 | 
|E.W. Brown 3(2)   |       |          | 429 |                   |   |  | 100.0        |    |  |          | 429  |       |  |  | 1971 | 
|Ghent 1(2)        |       |          | 475 |                   |   |  | 100.0        |    |  |          | 475  |       |  |  | 1974 | 
|Ghent 2(2)        |       |          | 484 |                   |   |  | 100.0        |    |  |          | 484  |       |  |  | 1977 | 
|Ghent 3(2)        |       |          | 493 |                   |   |  | 100.0        |    |  |          | 493  |       |  |  | 1981 | 
|Ghent 4(2)        |       |          | 493 |                   |   |  | 100.0        |    |  |          | 493  |       |  |  | 1984 | 
|Green River 3(2)  |       |          | 68  |                   |   |  | 100.0        |    |  |          | 68   |       |  |  | 1954 | 
|Green River 4(2)  |       |          | 95  |                   |   |  | 100.0        |    |  |          | 95   |       |  |  | 1959 | 
|Mill Creek 1(1)   |       |          | 303 |                   |   |  | 100.0        |    |  |          | 303  |       |  |  | 1972 | 
|Mill Creek 2(1)   |       |          | 301 |                   |   |  | 100.0        |    |  |          | 301  |       |  |  | 1974 | 
|Mill Creek 3(1)   |       |          | 391 |                   |   |  | 100.0        |    |  |          | 391  |       |  |  | 1978 | 
|Mill Creek 4(1)   |       |          | 477 |                   |   |  | 100.0        |    |  |          | 477  |       |  |  | 1982 | 
|Trimble County(1) |       |          | 511 |                   |   |  | 75.0         |    |  |          | 383  |       |  |  | 1990 | 
|Tyrone 3(2)       |       |          | 71  |                   |   |  | 100.0        |    |  |          | 71   |       |  |  | 1953 | 
|                  |       |          |     |                   |   |  |              |    |  |          |      |      
|                  | Total |          |     | 5,422             |   |  |              |    |  |          |      | 5,294 |  |  |      |  | 
|                  |       |          |     |                   |   |  |              |    |  |          |      |      
|Natural Gas       |       |          |     |                   |   |  |              |    |  |          |      |       |  |  |      | 
|Cane Run 11(1)    |       |          | 14  |                   |   |  | 100.0        |    |  |          | 14   |       |  |  | 1968 | 
|E.W. Brown 5(3)   |       |          | 117 |                   |   |  | 100.0        |    |  |          | 117  |       |  |  | 2001 | 
|E.W. Brown 6(3)   |       |          | 154 |                   |   |  | 100.0        |    |  |          | 154  |       |  |  | 1999 | 
|E.W. Brown 7(3)   |       |          | 154 |                   |   |  | 100.0        |    |  |          | 154  |       |  |  | 1999 | 
|E.W. Brown 8(2)   |       |          | 106 |                   |   |  | 100.0        |    |  |          | 106  |       |  |  | 1995 | 
|E.W. Brown 9(2)   |       |          | 106 |                   |   |  | 100.0        |    |  |          | 106  |       |  |  | 1994 | 

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|                                   |       |          |       |                   |   |  |              |    |  |          |       |       |  |  |      |  | 
|---------------------------------- | ----- | -------- | ----- | ----------------- | - |  | ------------ | -- |  | -------- | ----- | ----- |  |  | ---- |  | 
|                                   |       |          |       | E.ON U.S.s Share |   |  |             
|                                   |       |          |       |                   |   |  |             
|                                   |       | Total    |       |                   |   |  | Attributable |    |  |         
|                                   |       | Capacity |       |                   |   |  | Capacity     |    |  | Start-up |      
|Power Plants                       |       | Net MW   |       |                   | % |  |              | MW |  |          | Date  |      
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      
|Natural Gas (continued)            |       |          |       |                   |   |  |              |    |  |          |       |       |  |  |      | 
|E.W. Brown 10(2)                   |       |          | 106   |                   |   |  | 100.0        |    |  |          | 106   |       |  |  | 1995 | 
|E.W. Brown 11(2)                   |       |          | 106   |                   |   |  | 100.0        |    |  |          | 106   |       |  |  | 1996 | 
|E.W. Brown IAC(3)                  |       |          | 98    |                   |   |  | 100.0        |    |  |          | 98    |       |  |  | 2000 | 
|Haefling 1(2)                      |       |          | 12    |                   |   |  | 100.0        |    |  |          | 12    |       |  |  | 1970 | 
|Haefling 2(2)                      |       |          | 12    |                   |   |  | 100.0        |    |  |          | 12    |       |  |  | 1970 | 
|Haefling 3(2)                      |       |          | 12    |                   |   |  | 100.0        |    |  |          | 12    |       |  |  | 1970 | 
|Paddys Run 11(1)                  |       |          | 12    |                   |   |  | 100.0        |    |  |          | 12    |       |  |  | 1968 | 
|Paddys Run 12(1)                  |       |          | 23    |                   |   |  | 100.0        |    |  |          | 23    |       |  |  | 1968 | 
|Paddys Run 13(3)                  |       |          | 158   |                   |   |  | 100.0        |    |  |          | 158   |       |  |  | 2001 | 
|Trimble County 5(3)                |       |          | 160   |                   |   |  | 100.0        |    |  |          | 160   |       |  |  | 2002 | 
|Trimble County 6(3)                |       |          | 160   |                   |   |  | 100.0        |    |  |          | 160   |       |  |  | 2002 | 
|Trimble County 7(3)                |       |          | 160   |                   |   |  | 100.0        |    |  |          | 160   |       |  |  | 2004 | 
|Trimble County 8(3)                |       |          | 160   |                   |   |  | 100.0        |    |  |          | 160   |       |  |  | 2004 | 
|Trimble County 9(3)                |       |          | 160   |                   |   |  | 100.0        |    |  |          | 160   |       |  |  | 2004 | 
|Trimble County 10(3)               |       |          | 160   |                   |   |  | 100.0        |    |  |          | 160   |       |  |  | 2004 | 
|Waterside 7(1)                     |       |          | 11    |                   |   |  | 100.0        |    |  |          | 11    |       |  |  | 1964 | 
|Waterside 8(1)                     |       |          | 11    |                   |   |  | 100.0        |    |  |          | 11    |       |  |  | 1964 | 
|Zorn 1(1)                          |       |          | 14    |                   |   |  | 100.0        |    |  |          | 14    |       |  |  | 1969 | 
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      
|                                   | Total |          |       | 2,186             |   |  |              |    |  |          |       | 2,186 |  |  |      |  | 
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      
|Oil                                |       |          |       |                   |   |  |              |    |  |          |       |       |  |  |      | 
|Tyrone Unit 1(2)                   |       |          | 27    |                   |   |  | 100.0        |    |  |          | 27    |       |  |  | 1947 | 
|Tyrone Unit 2(2)                   |       |          | 31    |                   |   |  | 100.0        |    |  |          | 31    |       |  |  | 1948 | 
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      
|                                   | Total |          |       | 58                |   |  |              |    |  |          |       | 58    |  |  |      |  | 
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      
|Hydroelectric                      |       |          |       |                   |   |  |              |    |  |          |       |       |  |  |      | 
|Dix Dam(2)                         |       |          | 24    |                   |   |  | 100.0        |    |  |          | 24    |       |  |  | 1925 | 
|Ohio Falls(1)                      |       |          | 48    |                   |   |  | 100.0        |    |  |          | 48    |       |  |  | 1928 | 
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      
|                                   | Total |          |       | 72                |   |  |              |    |  |          |       | 72    |  |  |      |  | 
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      
|E.ON U.S. Regulated Business Total |       |          | 7,738 |                   |   |  |              |    |  |          | 7,610 |       |  |  |      | 
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      
|Shutdown                           |       |          |       |                   |   |  |              |    |  |          |       |       |  |  |      | 
|Green River 1(2)                   |       |          | 22    |                   |   |  | 100.0        |    |  |          | 22    |       |  |  | 1950 | 
|Green River 2(2)                   |       |          | 22    |                   |   |  | 100.0        |    |  |          | 22    |       |  |  | 1950 | 
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      
|                                   | Total |          |       | 44                |   |  |              |    |  |          |       | 44    |  |  |      |  | 
|                                   |       |          |       |                   |   |  |              |    |  |          |       |      






|    |                                             
|--- | --------------------------------------------
|(1) | Power stations owned by LG&E.               
|   
|(2) | Power stations owned by KU.                 
|   
|(3) | Power stations jointly owned by LG&E and KU.

Fuel.


86



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Asset-Based Energy Marketing. mark-to marked-to


Transmission








87



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Distribution/ Retail






|                                    |       |             |        |        |             |  |        |        | 
|----------------------------------- | ----- | ----------- | ------ | ------ | ----------- |  | ------ | ------ | 
|                                    |       | Total 2005  |        |        | Total 2004  | 
|Sales of Electric Power to          |       | million kWh |        |        | million kWh | 
|                                    |       |             |        |        |             | 
|Residential                         |       |             | 10,864 |        |             |  | 10,084 |       
|Commercial and industrial customers |       |             | 16,684 |        |             |  | 16,276 |       
|Municipals                          |       |             | 2,014  |        |             |  | 1,959  |       
|Other retail                        |       |             | 3,720  |        |             |  | 3,576  |       
|Off-system sales                    |       |             | 4,434  |        |             |  | 4,199  |       
|                                    |       |             |        |        |             | 
|                                    | Total |             |        | 37,716 |             |  |        | 36,094 | 
|                                    |       |             |        |        |             | 





Non-regulated
Businesses


ECC.


Argentine Gas Distribution Operations.


LPI.


LEM.


88



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OTHER ACTIVITIES


Degussa


Overview


   





Operations




DEGUSSA


| |  |                                     |  |                                     |  |                                |  |                               |  | 
| |  | ----------------------------------- |  | ----------------------------------- |  | ------------------------------ |  | ----------------------------- |  | 
| |  |                                     |  |                                    
| |  | Technology                          |  | Construction                        |  | Consumer                       |  | Specialty                     |  | 
| |  | Specialists                         |  | Chemicals                           |  | Solutions                      |  | Materials                     |  | 
| |  |                                     |  |                                    
| |  | Building Blocks                     |  | Admixture Systems
    Europe        |  | Superabsorber                  |  | Coatings &
    Colorants      |  | 
| |  |                                     |  |                                    
| |  | Exclusive Synthesis
    & Catalysts |  | Admixture Systems
    North America |  | Care & Surface
    Specialties |  | High Performance
    Polymers |  | 
| |  |                                     |  |                                    
| |  | C 4-Chemistry                       |  | Admixture Systems
    Asia/Pacific  |  | Feed Additives                 |  | Methacrylates                 |  | 
| |  |                                     |  |                                    
| |  | Aerosil & Silanes                   |  | Construction Systems
    Europe     |  |                                |  | Specialty Acrylics            |  | 
| |  |                                     |  |                                    
| |  | Advanced Fillers &
    Pigments     |  | Construction Systems
    Americas   |  |                                |  |                               |  | 



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DISCONTINUED OPERATIONS




Oil


        


Aluminum


    


Silicon Wafers




90



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


Other Activities


     


    


Other


   


  


     




91



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 







REGULATORY ENVIRONMENT


EU/ GERMANY: GENERAL ASPECTS (ELECTRICITY AND GAS)


Overview




Energiewirtschaftsgesetz,




Zweites Gesetz zur Neuregelung des
Energiewirtschaftsrechts






The First Electricity and
Gas Directives




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The German Energy Law


Gesetz gegen Wettbewerbsbeschränkungen




The Second Electricity and
Gas Directives


Completion of the Internal Electricity Market/ The Second
Electricity Directive.






93



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| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The contribution of each energy source to the overall fuel mix
    of the supplier over the preceding year; and                                                                             
|
| |  | A reference to where information is publicly available on the
    environmental impact of the suppliers activities,
    including the amount of
    CO2
    and radioactive waste produced.

i.e.


Completion of the Internal Gas Market/ The Second Gas
Directive.




Revisions of the German
Energy Law


(Erstes Gesetz zur Änderung des Gesetzes zur
Neuregelung des Energiewirtschaftsrechts) Verbändevereinbarung
Strom II+ Verbändevereinbarung
Gas II


(Zweites
Gesetz zur Neuregelung des Energiewirtschaftsrechts)


94



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Bundesnetzagentur




Network access and network charge regulation: rate-of




Unbundling of network operators:






European Regulation on
Cross-Border Trading




95



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i.e.


Greenhouse Gas Emissions
Trading


2 2 2  2


Treibhausgas-Emissionshandelsgesetz Zuteilungsgesetz 2007 2 2 Deutsche Emissionshandelsstelle 2 e.g., 2


2 2


96



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2 2 2 2


Energy Infrastructure and
Security of Supply








Security of Energy Supply
(Gas)






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Member states must adopt adequate minimum security of supply
    standards, and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | A three step procedure will take effect in the event
    of a major supply disruption for a significant period of time.
    Under the three step procedure, the gas industry
    should take measures as a first response to such a disruption,
    followed by national measures taken by member states. In the
    event of inadequate measures at the national level, the Gas
    Coordination Group, consisting of representatives of member
    states, the gas industry and relevant consumers under the
    chairmanship of the European Commission, would then decide on
    necessary measures.

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Markets in Financial
Instruments Directive






GERMANY: ELECTRICITY


The Electricity Feed-in Law
and the Renewable Energy Law


Stromeinspeisungsgesetz






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Fixed charges for renewable energies: Charges for
    renewable energies are fixed. For wind turbines coming online in
    2006, the charge is fixed at 8.36
    cent/kWh. This
    charge is limited in time, with a general term of five years
    that may be extended up to 20 years depending upon the
    actual production volume of the installation. After five years,
    the charge is reduced to 5.28
    cent/kWh if
    150 percent or more of a reference production, which is the
    potential production of the installed wind turbine operating
    with a constant wind speed of five meters per second over five
    years, has been produced. In addition, the fixed charge is
    reduced by two percent for new wind turbines every year. For
    wind turbines coming online in 2007, this means a reduction to
    8.19 cent/kWh
    and 5.17
    cent/kWh
    respectively.      
|
| |  | National burden sharing: The Renewable Energy Law assumes
    that the subsidy obligation would be passed on in full to the
    supplying companies. At the transmission company level, there is
    an equalization process covering the whole country. Each
    transmission company first determines how much electricity it
    takes up under the Renewable Energy Law and how much electricity
    in total flows in its region to end users. An equalization will
    then be effected among all transmission companies so that all
    transmission companies take on and subsidize proportionally
    equivalent amounts of renewable electricity under the statute.
    The transmission company will then pass these quantities of
    electricity and the corresponding costs on to the suppliers
    delivering electricity to end users in its region in proportion
    to their respective sales.

back-up


98



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back-up


Steuer- und
Abgabeklauseln


Co-Generation Protection
Law


(Kraft-Wärme-Kopplung-Gesetz)




| |   |                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | CHP plants that were commissioned before 1990 received 1.53
    cent/kWh in 2002
    and 2003 and
    1.38 cent/kWh
    in 2004 and 2005, and will receive 0.97
    cent/kWh in 2006;                                                                                                          
|
| |  | CHP plants that were commissioned after 1990 received 1.53
    cent/kWh in 2002
    and 2003 and
    1.38 cent/kWh
    in 2004 and 2005, and will receive 1.23
    cent/kWh in 2006
    and 2007, 0.82
    cent/kWh in
    2008, and 0.56
    cent/kWh in 2009;                              
|
| |  | CHP plants that are modernized received 1.74
    cent/kWh in
    2002, 2003 and 2004 and 1.69
    cent/kWh in
    2005, and will receive 1.69
    cent/kWh in
    2006, 1.64
    cent/kWh in 2007
    and 2008, and 1.59
    cent/kWh in 2009
    and 2010; and                              
|
| |  | Small CHP plants with an installed capacity of less than two MW
    received 2.56
    cent/kWh in 2002
    and 2003 and 2.4
    cent/kWh in 2004
    and 2005, and will receive 2.25
    cent/kWh in 2006
    and 2007, 2.1
    cent/kWh in 2008
    and 2009, and 1.94
    cent/kWh in 2010.

   2


2


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Electricity Network
Access


Verbändevereinbarung, Verbändevereinbarung II Verbändevereinbarung II+ Verbändevereinbarung II+


Electricity Network
Charges


rate-of


Electricity Rate
Regulation


Bundestarifordnung Elektrizität,    




GERMANY: GAS


Gas Network Access




100



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##### Table of Contents



Gas Network Charges


rate-of




Gas Rates




e.g.


U.K.








Electricity




101



---



##### Table of Contents

















Gas






102



---



##### Table of Contents





NORDIC


Sweden


Electricity. (Ellag (1997:857)












103



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##### Table of Contents





(SFS 2005: 1110)


Gas. Naturgaslag (2005:403)




Renewable Energy and Electricity Certificates. (SCS
2003:313)




Finland


Sähkömarkkinalaki (386/1995)


104



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(Laki
sähkömarkkinalain muuttamisesta No. 1172)


U.S. MIDWEST


Retail Electric Rate
Regulation








105



---



##### Table of Contents











Retail Gas Rate
Regulation




106



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##### Table of Contents



Transmission
Developments






Energy Policy Act of 2005
and Repeal of PUHCA






107



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##### Table of Contents



Other Regulations









ENVIRONMENTAL MATTERS


GENERAL








GERMANY: ELECTRICITY


Air Pollution. Bundesimmissionsschutzgesetz, Verordnung über
Großfeuerungsanlagen, x x


108



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




Nuclear Energy. Euratomvertrag (Pariser Haftungsübereinkommen) (Nichtverbreitungsvertrag)


(Kernbrennstoff)




Liability. (Umwelthaftungsgesetz)


Atomrechtliche Deckungsvorsorge-Verordnung,   


109



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GERMANY: GAS


Air Pollution. x




Gas Storage. 12. Verordnung zur Durchführung des
Bundesimmissionsschutzgesetzes, Störfallverordnung




U.K.


2 x






110



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2 2 2










NORDIC


Air Pollution. x x


x 2 x








Nuclear Energy.


111



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##### Table of Contents



(SFS 1984:3) SFS 1968:45 (SFS 1992:1537)






Liability. 




U.S. MIDWEST




2 x 2 x x


x x


112



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##### Table of Contents



x


x x x x x x


2 x x 2


x 2


2 x


8-hour 2 x






113



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OPERATING ENVIRONMENT









ECONOMIC BACKGROUND


Germany









Europe






114



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##### Table of Contents









United Kingdom




Sweden/Finland




United States







RISK MANAGEMENT




115



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ORGANIZATIONAL STRUCTURE


day-to


|                         |  |               |         |            |                    |  |            |                 |  |  |       |  
|------------------------ |  | ------------- | ------- | ---------- | ------------------ |  | ---------- | --------------- |  |  | ----- | -
|                         |  |               |         | Percentage |                    |  | Percentage |                
|                         |  | Country of    |         |            | Ownership Interest |  |            | Voting Interest | 
|Name of Subsidiary       |  | Incorporation |         |            | held by E.ON       |  |            | held by E.ON    | 
|                         |  |               |         |            |                    |  |            |                 | 
|E.ON Energie AG (energy) |  |               | Germany |            |                    |  | 100.0      | %               |  |  | 100.0 | %
|E.ON Ruhrgas AG (energy) |  |               | Germany |            |                    |  | 100.0      | %               |  |  | 100.0 | %
|E.ON UK plc (energy)     |  |               | U.K.    |            |                    |  | 100.0      | %               |  |  | 100.0 | %
|E.ON Nordic AB (energy)  |  |               | Sweden  |            |                    |  | 100.0      | %               |  |  | 100.0 | %
|E.ON U.S. LLC (energy)   |  |               | U.S.A.  |            |                    |  | 100.0      | %               |  |  | 100.0 | %




PROPERTY, PLANTS AND EQUIPMENT





GENERAL








PRODUCTION FACILITIES




| |               
| | --------------
| | Central Europe



116



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Pan-European Gas


3




U.K.




Nordic




U.S. Midwest




117



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##### Table of Contents





Other Activities


Degussa.







INTERNAL CONTROLS















|         |                           
|-------- | --------------------------
|Item 4A. | Unresolved Staff Comments.








|        |                                              
|------- | ---------------------------------------------
|Item 5. | Operating and Financial Review and Prospects.




OVERVIEW




    


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 


       






119



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##### Table of Contents





2005 Highlights.      





ACQUISITIONS AND DISPOSITIONS




Central Europe.


      


 




120



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  


 


  





  


 





  


Pan-European Gas.  




121



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 


   








 


U.K.    


      


122



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





Nordic. 


   





  


Central Europe/ Pan-European Gas/ U.K./ Nordic.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In July 2003, E.ON Energie and E.ON Ruhrgas each agreed to sell
    a 22.0 percent stake in Bayerngas to the municipal
    utilities of the cities of Munich, Augsburg, Regensburg and
    Ingolstadt, and to the city of Landshut, for a total of
    127 million.
    The transaction was completed in November 2003. E.ON Energie
    realized a gain on the disposal in the amount of
    22 million.
    No gain was realized on the sale of the E.ON Ruhrgas stake, as
    these shares had been recorded at their fair value at the time
    of E.ONs acquisition of Ruhrgas.
|
| |  | In September 2003, E.ON Energie sold its 80.5 percent
    interest in Gelsenwasser to a joint venture company owned by the
    municipal utilities of the cities of Dortmund and Bochum.
    Gelsenwasser was accounted for as a discontinued operation in
    the Consolidated Financial Statements. For further information,
    see Discontinued Operations below.                                                                                                                                                                                                                

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In October 2003, E.ON Energie transferred its 5.26 percent
    stake in VNG to E.ON Ruhrgas, which already owned an interest in
    this Leipzig-based gas distributor. In December 2003, E.ON
    Ruhrgas agreed to sell 32.1 percent of VNG to EWE
    Aktiengesellschaft (EWE), and offered its remaining
    10.0 percent stake in VNG to eleven municipalities in
    eastern Germany for the same price per share. The total
    consideration for the sale of the entire interest was
    approximately
    899 million.
    E.ON Energie realized a gain of approximately
    60 million
    on its stake. No gain was realized on the sale of the E.ON
    Ruhrgas stake, as these shares had been recorded at their fair
    value at the time of E.ONs acquisition of Ruhrgas. The
    sales were subject to the fulfillment of a number of conditions
    and were completed in January 2004.
|
| |  | In November 2003, E.ON Energie divested its 100 percent
    interest in E.ON-Energiebeteiligungs-Gesellschaft to EWE for
    305 million.
    E.ON Energiebeteiligungs-Gesellschaft had a 32.36 percent
    interest in swb, comprising all of the shares previously held by
    E.ON Energie and E.ON Ruhrgas. E.ON Energie realized a gain on
    the disposal in the amount of
    85 million.
    No gain was realized on the sale of the E.ON Ruhrgas stake, as
    these shares had been recorded at their fair value at the time
    of E.ONs acquisition of Ruhrgas.                                                                                                                                                                                                                                                                                                                               
|
| |  | In December 2003, E.ON concluded an agreement to divest its
    stake in EWE. E.ON Energies 27.4 percent stake in EWE
    was acquired by EWEs majority shareholders Energieverband
    Elbe-Weser Beteiligungsholding GmbH and Weser-Ems
    Energiebeteiligungen GmbH for total consideration of
    approximately
    520 million.
    E.ON recorded a gain of
    257 million
    on the disposal, which was completed in January 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                               

 


Corporate Center.     


  


Discontinued Operations.


124



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  


    


        


  


 


125



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     


    


     


 






126



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##### Table of Contents






CRITICAL ACCOUNTING POLICIES




Goodwill and Intangible Assets




Business Combinations.


i.e.


Goodwill.




 


127



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Fair Value of Derivatives






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Currency, electricity, gas, oil and coal forward contracts,
    swaps, and emission rights derivatives are valued separately at
    future rates or market prices as of the balance sheet date. The
    fair values of spot and forward contracts are based on spot
    prices that consider forward premiums or discounts from quoted
    prices in the relevant markets.                                                                                                                              
|
| |  | Market prices for currency, electricity and gas options are
    obtained using standard option pricing models commonly used in
    the market. The fair values of caps, floors, and collars are
    determined on the basis of quoted market prices or on
    calculations based on option pricing models.                                                                                                                                                                                              
|
| |  | The fair values of existing instruments to hedge interest rate
    risk are determined by discounting future cash flows using
    market interest rates over the remaining term of the instrument.
    Discounted cash values are determined for interest rate,
    cross-currency and cross-currency/interest rate swaps for each
    individual transaction as of the balance sheet date. Interest
    income is considered with an effect on current results at the
    date of payment or accrual.  
|
| |  | Equity swaps are valued on the basis of the stock prices of the
    underlying equities, taking into consideration any financing
    components.                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Exchange-traded energy future and option contracts are valued
    individually at daily settlement prices determined on the
    futures markets that are published by their respective clearing
    houses. Initial margins paid are disclosed under other assets.
    Variation margins received or paid during the term of such
    contracts are stated under other liabilities or other assets,
    respectively, and are accounted for with an impact on earnings
    at settlement or realization.
|
| |  | Certain long-term commodity contracts are valued by the use of
    valuation models that include average probabilities and take
    into account individual contract details and variables.                                                                                                                                                                                                                                                                                                             



i.e.


128



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Electricity Contracts




Gas Contracts




Deferred Taxes




Nuclear Waste Management




129



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





NEW ACCOUNTING PRONOUNCEMENTS






| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | SFAS No. 123, Share-Based Payment;                                                                                                
|
| |  | SFAS No. 154, Accounting Changes and Error
    Corrections  a replacement of APB Opinion No. 29
    and FASB Statement No. 3; and
|
| |  | SFAS No. 155, Accounting for Certain Hybrid Financial
    Instruments  an amendment of FASB Statements
    No. 133 and 140.      






RESULTS OF OPERATIONS


     






130



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BUSINESS SEGMENT INFORMATION








E.ON BUSINESS SEGMENT SALES AND ADJUSTED EBIT


|                       |                        |       |        |          |      |                 |       |       |          |  |        |        |  |          |       |       |      |  |        |        |  |  |       |       | 
|---------------------- | ---------------------- | ----- | ------ | -------- | ---- | --------------- | ----- | ----- | -------- |  | ------ | ------ |  | -------- | ----- | ----- | ---- |  | ------ | ------ |  |  | ----- | ----- | 
|                       |                        | 2005  |        |          | 2004 |                 |       | 2003  |         
|                       |                        |       |        |          |      |                 |       |       |         
|                       |                        |       |        | Adjusted |      |                 |       |       | Adjusted |  |        |        |  | Adjusted |      
|                       |                        | Sales |        |          | EBIT |                 |       | Sales |          |  | EBIT   |        |  | Sales    |       |       | EBIT | 
|                       |                        |       |        |          |      |                 |       |       |          |  |        |        |  |          |       |       |      | 
|                       |                        |       |        |          |      | ( in millions) |       |       |          |  |       
|Central Europe(1)(2)   |                        |       | 24,295 |          |      |                 | 3,930 |       |          |  | 20,752 |        |  |          | 3,602 |       |      |  | 19,253 |        |  |  | 2,979 |      
|Pan-European Gas(2)(3) |                        |       | 17,914 |          |      |                 | 1,536 |       |          |  | 13,227 |        |  |          | 1,344 |       |      |  | 11,919 |        |  |  | 1,401 |      
|U.K.                   |                        |       | 10,176 |          |      |                 | 963   |       |          |  | 8,490  |        |  |          | 1,017 |       |      |  | 7,923  |        |  |  | 610   |      
|Nordic(4)              |                        |       | 3,471  |          |      |                 | 806   |       |          |  | 3,347  |        |  |          | 701   |       |      |  | 2,824  |        |  |  | 546   |      
|U.S. Midwest(2)        |                        |       | 2,045  |          |      |                 | 365   |       |          |  | 1,718  |        |  |          | 354   |       |      |  | 1,771  |        |  |  | 318   |      
|Corporate Center(2)(5) |                        |       | (1,502 | )        |      |                 | (399  | )     |          |  | (792   | )      |  |          | (338  | )     |      |  | (575   | )      |  |  | (323  | )    
|                       |                        |       |        |          |      |                 |       |       |          |  |        |        |  |          |       |       |      | 
|                       | Core Energy Business   |       |        | 56,399   |      |                 |       | 7,201 |          |  |        | 46,742 |  |          |       | 6,680 |      |  |        | 43,115 |  |  |       | 5,531 | 
|                       | Other Activities(2)(6) |       |        |         |      |                 |       | 132   |          |  |        |       |  |          |       | 107   |      |  |        | 994    |  |  |       | 176   | 
|                       |                        |       |        |          |      |                 |       |       |          |  |        |        |  |          |       |       |      | 
|Total                  |                        |       | 56,399 |          |      |                 | 7,333 |       |          |  | 46,742 |        |  |          | 6,787 |       |      |  | 44,109 |        |  |  | 5,707 |      
|                       |                        |       |        |          |      |                 |       |       |          |  |        |        |  |          |       |       |      | 






|    |                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Sales include electricity taxes of
    1,049 million
    in 2005,
    1,051 million
    in 2004 and
    1,015 million
    in 2003.                                                                                                                                   
|   
|(2) | Excludes the sales and adjusted EBIT of certain activities now
    accounted for as discontinued operations. For more details, see
     Acquisitions and Dispositions 
    Discontinued Operations and Note 4 of the Notes to
    Consolidated Financial Statements.

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Includes the results of the former Ruhrgas activities from the
    date of consolidation on February 1, 2003. Sales include
    natural gas and electricity taxes of
    3,110 million
    in 2005,
    2,923 million
    in 2004 and
    2,555 million
    in 2003.                                                                                                                                                         
|   
|(4) | Sales include electricity and natural gas taxes of
    402 million
    in 2005,
    395 million
    in 2004 and
    324 million
    in 2003.                                                                                                                                                                                                                                                                                 
|   
|(5) | Includes primarily the parent company and effects from
    consolidation (including the elimination of intersegment sales),
    as well as the results of its remaining telecommunications
    interests, as explained in Item 4. Information on the
    Company  Business Overview 
    Introduction. Sales between companies in the same market
    unit are eliminated in calculating sales on the market unit
    level.
|   
|(6) | In 2003, includes sales of Degussa for the month of January
    only, prior to its deconsolidation. For more details, see
    Item 4. Information on the Company 
    Business Overview  Other Activities 
    Degussa and Note 4 of the Notes to Consolidated
    Financial Statements.                                                                                                                                   



Reconciliation of Adjusted EBIT.


|                                                                                        |  |                 |        |   |      |  |        |      |  |  |        |  
|--------------------------------------------------------------------------------------- |  | --------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | -
|                                                                                        |  | 2005            |        |   | 2004 |  |        | 2003 | 
|                                                                                        |  |                 |        |   |      |  |        |      | 
|                                                                                        |  | ( in millions) |       
|Adjusted EBIT                                                                           |  |                 | 7,333  |   |      |  | 6,787  |      |  |  | 5,707  |  
|Adjusted interest income, net                                                           |  |                 | (1,027 | ) |      |  | (1,031 | )    |  |  | (1,515 | )
|Net book gains                                                                          |  |                 | 491    |   |      |  | 589    |      |  |  | 1,257  |  
|Cost-management and restructuring expenses                                              |  |                 | (29    | ) |      |  | (100   | )    |  |  | (479   | )
|Other non-operating results                                                             |  |                 | 440    |   |      |  | 110    |      |  |  | 195    |  
|                                                                                        |  |                 |        |   |      |  |        |      | 
|Income/(loss) from continuing operations before income taxes
    and minority interests |  |                 | 7,208  |   |      |  | 6,355  |      |  |  | 5,165  |  
|Income taxes                                                                            |  |                 | (2,276 | ) |      |  | (1,850 | )    |  |  | (1,145 | )
|Minority interests                                                                      |  |                 | (553   | ) |      |  | (478   | )    |  |  | (445   | )
|                                                                                        |  |                 |        |   |      |  |        |      | 
|Income/(loss) from continuing operations                                                |  |                 | 4,379  |   |      |  | 4,027  |      |  |  | 3,575  |  
|Income/(loss) from discontinued operations                                              |  |                 | 3,035  |   |      |  | 312    |      |  |  | 1,512  |  
|Cumulative effect of change in accounting principles                                    |  |                 | (7     | ) |      |  |       |      |  |  | (440   | )
|                                                                                        |  |                 |        |   |      |  |        |      | 
|Net income                                                                              |  |                 | 7,407  |   |      |  | 4,339  |      |  |  | 4,647  |  
|                                                                                        |  |                 |        |   |      |  |        |      | 




YEAR ENDED DECEMBER 31, 2005 COMPARED WITH YEAR ENDED
DECEMBER 31, 2004


E.ON Group


 


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                 


            


        


      


           


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          


     


  


  


  


     


Reconciliation of Adjusted EBIT.


 


    (Endlager-Vorausleistungsverordnung).  


134



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


|                                                                                                                    |  |                 |        |   |      |  |        |  
|------------------------------------------------------------------------------------------------------------------- |  | --------------- | ------ | - | ---- |  | ------ | -
|                                                                                                                    |  | 2005            |        |   | 2004 | 
|                                                                                                                    |  |                 |        |   |      | 
|                                                                                                                    |  | ( in millions) |       
|Interest income and similar expenses (net) as shown in
    Note 6 of the Notes to Consolidated Financial Statements |  |                 | (736   | ) |      |  | (1,062 | )
|(+) Non-operating interest income, net(1)                                                                           |  |                 | (39    | ) |      |  | 151    |  
|() Interest portion of long-term provisions                                                                        |  |                 | 252    |   |      |  | 120    |  
|                                                                                                                    |  |                 |        |   |      | 
|Adjusted interest income, net                                                                                       |  |                 | (1,027 | ) |      |  | (1,031 | )
|                                                                                                                    |  |                 |        |   |      | 






|    |                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------
|(1) | This net figure is calculated by adding in non-operating
    interest expense and subtracting non-operating interest income.

       


     


          


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Central Europe




      




SALES OF CENTRAL EUROPE MARKET UNIT


|                     |       |                 |        |        |        |         |        |        |        |  |       |       |       | 
|-------------------- | ----- | --------------- | ------ | ------ | ------ | ------- | ------ | ------ | ------ |  | ----- | ----- | ----- | 
|                     |       |                 |        |        |        | Percent |       
|                     |       | 2005            |        |        | 2004   |         |        | Change |       
|                     |       |                 |        |        |        |         |        |        |       
|                     |       | ( in millions) |        |        |       
|Central Europe West  |       |                 | 20,408 |        |        |         | 17,576 |        |        |  | +16.1 |      
|                     | Power |                 |        | 16,945 |        |         |        | 14,597 |        |  |       | +16.1 |      
|                     | Gas   |                 |        | 3,463  |        |         |        | 2,979  |        |  |       | +16.2 |      
|Central Europe East  |       |                 | 2,618  |        |        |         | 1,877  |        |        |  | +39.5 |      
|Other/ Consolidation |       |                 | 220    |        |        |         | 248    |        |        |  | -11.3 |      
|                     |       |                 |        |        |        |         |        |        |       
|                     |       | Total           |        |        | 23,246 |         |        |        | 19,701 |  |       |       | +18.0 | 
|                     |       |                 |        |        |        |         |        |        |       

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




 


ADJUSTED EBIT OF CENTRAL EUROPE MARKET UNIT


|                     |       |                 |       |       |       |         |       |        |       |  |       |       |      | 
|-------------------- | ----- | --------------- | ----- | ----- | ----- | ------- | ----- | ------ | ----- |  | ----- | ----- | ---- | 
|                     |       |                 |       |       |       | Percent |      
|                     |       | 2005            |       |       | 2004  |         |       | Change |      
|                     |       |                 |       |       |       |         |       |        |      
|                     |       | ( in millions) |       |       |      
|Central Europe West  |       |                 | 3,696 |       |       |         | 3,311 |        |       |  | +11.6 |      
|                     | Power |                 |       | 3,389 |       |         |       | 2,996  |       |  |       | +13.1 |     
|                     | Gas   |                 |       | 307   |       |         |       | 315    |       |  |       | -2.5  |     
|Central Europe East  |       |                 | 237   |       |       |         | 235   |        |       |  | +0.9  |      
|Other/ Consolidation |       |                 | (3    | )     |       |         | 56    |        |       |  |      |      
|                     |       |                 |       |       |       |         |       |        |      
|                     |       | Total           |       |       | 3,930 |         |       |        | 3,602 |  |       |       | +9.1 | 
|                     |       |                 |       |       |       |         |       |        |      

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Pan-European Gas


Up-/Midstream, .




     




SALES OF PAN-EUROPEAN GAS MARKET UNIT


|                     |       |                 |        |        |      |         |       |        |  |  |       |       | 
|-------------------- | ----- | --------------- | ------ | ------ | ---- | ------- | ----- | ------ |  |  | ----- | ----- | 
|                     |       |                 |        |        |      | Percent |      
|                     |       | 2005            |        |        | 2004 |         |       | Change | 
|                     |       |                 |        |        |      |         |       |        | 
|                     |       | ( in millions) |        |        |     
|Up-/ Midstream       |       |                 | 13,380 |        |      |         | 9,274 |        |  |  | +44.3 |      
|Downstream           |       |                 | 1,848  |        |      |         | 1,358 |        |  |  | +36.1 |      
|Other/ Consolidation |       |                 | (424   | )      |      |         | (328  | )      |  |  | -29.3 |      
|                     |       |                 |        |        |      |         |       |        | 
|                     | Total |                 |        | 14,804 |      |         |       | 10,304 |  |  |       | +43.7 | 
|                     |       |                 |        |        |      |         |       |        | 

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 




ADJUSTED EBIT OF PAN-EUROPEAN GAS MARKET UNIT


|                         |       |                 |     |       |      |         |     |        |  |  |       |       | 
|------------------------ | ----- | --------------- | --- | ----- | ---- | ------- | --- | ------ |  |  | ----- | ----- | 
|                         |       |                 |     |       |      | Percent |    
|                         |       | 2005            |     |       | 2004 |         |     | Change | 
|                         |       |                 |     |       |      |         |     |        | 
|                         |       | ( in millions) |     |       |     
|Up-/ Midstream           |       |                 | 988 |       |      |         | 862 |        |  |  | +14.6 |      
|Downstream Shareholdings |       |                 | 551 |       |      |         | 486 |        |  |  | +13.4 |      
|Other/ Consolidation     |       |                 | (3  | )     |      |         | (4  | )      |  |  | +25.0 |      
|                         |       |                 |     |       |      |         |     |        | 
|                         | Total |                 |     | 1,536 |      |         |     | 1,344  |  |  |       | +14.3 | 
|                         |       |                 |     |       |      |         |     |        | 

            e.g. 


    


U.K.


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SALES OF U.K. MARKET UNIT


|                       |       |                 |       |        |      |         |       |        |  |  |       |       | 
|---------------------- | ----- | --------------- | ----- | ------ | ---- | ------- | ----- | ------ |  |  | ----- | ----- | 
|                       |       |                 |       |        |      | Percent |      
|                       |       | 2005            |       |        | 2004 |         |       | Change | 
|                       |       |                 |       |        |      |         |       |        | 
|                       |       | ( in millions) |       |        |     
|Non-regulated Business |       |                 | 9,553 |        |      |         | 7,788 |        |  |  | +22.7 |      
|Regulated Business     |       |                 | 813   |        |      |         | 941   |        |  |  | -13.6 |      
|Other/ Consolidation   |       |                 | (190  | )      |      |         | (239  | )      |  |  | +20.5 |      
|                       |       |                 |       |        |      |         |       |        | 
|                       | Total |                 |       | 10,176 |      |         |       | 8,490  |  |  |       | +19.9 | 
|                       |       |                 |       |        |      |         |       |        | 

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ADJUSTED EBIT OF U.K. MARKET UNIT


|                       |       |                 |      |     |      |         |     |        |  |  |        |      | 
|---------------------- | ----- | --------------- | ---- | --- | ---- | ------- | --- | ------ |  |  | ------ | ---- | 
|                       |       |                 |      |     |      | Percent |    
|                       |       | 2005            |      |     | 2004 |         |     | Change | 
|                       |       |                 |      |     |      |         |     |        | 
|                       |       | ( in millions) |      |     |     
|Non-regulated Business |       |                 | 661  |     |      |         | 626 |        |  |  | +5.6   |     
|Regulated Business     |       |                 | 452  |     |      |         | 446 |        |  |  | +1.4   |     
|Other/ Consolidation   |       |                 | (150 | )   |      |         | (55 | )      |  |  | -172.7 |     
|                       |       |                 |      |     |      |         |     |        | 
|                       | Total |                 |      | 963 |      |         |     | 1,017  |  |  |        | -5.3 | 
|                       |       |                 |      |     |      |         |     |        | 

    2 


 


    




| |       
| | ------
| | Nordic

     




SALES OF NORDIC MARKET UNIT


|        |       |                 |       |       |      |         |       |        |  |  |      |      | 
|------- | ----- | --------------- | ----- | ----- | ---- | ------- | ----- | ------ |  |  | ---- | ---- | 
|        |       |                 |       |       |      | Percent |      
|        |       | 2005            |       |       | 2004 |         |       | Change | 
|        |       |                 |       |       |      |         |       |        | 
|        |       | ( in millions) |       |       |     
|Sweden  |       |                 | 2,821 |       |      |         | 2,714 |        |  |  | +3.9 |     
|Finland |       |                 | 248   |       |      |         | 238   |        |  |  | +4.2 |     
|        |       |                 |       |       |      |         |       |        | 
|        | Total |                 |       | 3,069 |      |         |       | 2,952  |  |  |      | +4.0 | 
|        |       |                 |       |       |      |         |       |        | 

  


  2




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  




ADJUSTED EBIT OF NORDIC MARKET UNIT


|        |       |                 |     |     |      |         |     |        |  |  |       |       | 
|------- | ----- | --------------- | --- | --- | ---- | ------- | --- | ------ |  |  | ----- | ----- | 
|        |       |                 |     |     |      | Percent |    
|        |       | 2005            |     |     | 2004 |         |     | Change | 
|        |       |                 |     |     |      |         |     |        | 
|        |       | ( in millions) |     |     |     
|Sweden  |       |                 | 765 |     |      |         | 662 |        |  |  | +15.6 |      
|Finland |       |                 | 41  |     |      |         | 39  |        |  |  | +5.1  |      
|        |       |                 |     |     |      |         |     |        | 
|        | Total |                 |     | 806 |      |         |     | 701    |  |  |       | +15.0 | 
|        |       |                 |     |     |      |         |     |        | 

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   2  


U.S. Midwest


 


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SALES OF U.S. MIDWEST MARKET UNIT


|                       |       |                 |       |       |      |         |       |        |  |  |       |       | 
|---------------------- | ----- | --------------- | ----- | ----- | ---- | ------- | ----- | ------ |  |  | ----- | ----- | 
|                       |       |                 |       |       |      | Percent |      
|                       |       | 2005            |       |       | 2004 |         |       | Change | 
|                       |       |                 |       |       |      |         |       |        | 
|                       |       | ( in millions) |       |       |     
|Regulated Business     |       |                 | 1,965 |       |      |         | 1,643 |        |  |  | +19.6 |      
|Non-regulated Business |       |                 | 80    |       |      |         | 75    |        |  |  | +6.7  |      
|                       |       |                 |       |       |      |         |       |        | 
|                       | Total |                 |       | 2,045 |      |         |       | 1,718  |  |  |       | +19.0 | 
|                       |       |                 |       |       |      |         |       |        | 

           


  


 




ADJUSTED EBIT OF U.S. MIDWEST MARKET UNIT


|                       |       |                 |     |     |      |         |     |        |  |  |      |      | 
|---------------------- | ----- | --------------- | --- | --- | ---- | ------- | --- | ------ |  |  | ---- | ---- | 
|                       |       |                 |     |     |      | Percent |    
|                       |       | 2005            |     |     | 2004 |         |     | Change | 
|                       |       |                 |     |     |      |         |     |        | 
|                       |       | ( in millions) |     |     |     
|Regulated Business     |       |                 | 351 |     |      |         | 339 |        |  |  | +3.5 |     
|Non-regulated Business |       |                 | 14  |     |      |         | 15  |        |  |  | -6.7 |     
|                       |       |                 |     |     |      |         |     |        | 
|                       | Total |                 |     | 365 |      |         |     | 354    |  |  |      | +3.1 | 
|                       |       |                 |     |     |      |         |     |        | 

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Corporate Center


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


Other Activities


 








YEAR ENDED DECEMBER 31, 2004 COMPARED WITH YEAR ENDED
DECEMBER 31, 2003


E.ON Group


 


                 


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       


        


                       


     


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  


     


Reconciliation of Adjusted EBIT.


     Endlager-Vorausleistungsverordnung  


|                                                                                                                    |  |                 |        |   |      |  |        |  
|------------------------------------------------------------------------------------------------------------------- |  | --------------- | ------ | - | ---- |  | ------ | -
|                                                                                                                    |  | 2004            |        |   | 2003 | 
|                                                                                                                    |  |                 |        |   |      | 
|                                                                                                                    |  | ( in millions) |       
|Interest income and similar expenses (net) as shown in
    Note 6 of the Notes to Consolidated Financial Statements |  |                 | (1,062 | ) |      |  | (978   | )
|(+) Non-operating interest income, net(1)                                                                           |  |                 | 151    |   |      |  | (62    | )
|() Interest portion of long-term provisions                                                                        |  |                 | 120    |   |      |  | 475    |  
|                                                                                                                    |  |                 |        |   |      | 
|Adjusted interest income, net                                                                                       |  |                 | (1,031 | ) |      |  | (1,515 | )
|                                                                                                                    |  |                 |        |   |      | 






|    |                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------
|(1) | This net figure is calculated by adding in non-operating
    interest expense and subtracting non-operating interest income.

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     


       


Central Europe




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SALES OF CENTRAL EUROPE MARKET UNIT


|                     |       |                 |        |        |         |         |        |        |        |  |        |      |      | 
|-------------------- | ----- | --------------- | ------ | ------ | ------- | ------- | ------ | ------ | ------ |  | ------ | ---- | ---- | 
|                     |       |                 |        |        |         | Percent |       
|                     |       | 2004            |        |        | 2003(1) |         |        | Change |       
|                     |       |                 |        |        |         |         |        |        |       
|                     |       | ( in millions) |        |        |        
|Central Europe West  |       |                 | 17,576 |        |         |         | 16,814 |        |        |  | +4.5   |     
|                     | Power |                 |        | 14,597 |         |         |        | 13,662 |        |  |        | +6.8 |     
|                     | Gas   |                 |        | 2,979  |         |         |        | 3,152  |        |  |        | -5.5 |     
|Central Europe East  |       |                 | 1,877  |        |         |         | 1,308  |        |        |  | +43.5  |     
|Other/ Consolidation |       |                 | 248    |        |         |         | 116    |        |        |  | +113.8 |     
|                     |       |                 |        |        |         |         |        |        |       
|                     |       | Total           |        |        | 19,701  |         |        |        | 18,238 |  |        |      | +8.0 | 
|                     |       |                 |        |        |         |         |        |        |       






|    |                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes sales of Thüga and the activities transferred to
    the Pan-European Gas market unit and those of E.ON Sverige and
    the other businesses of E.ON Nordic.

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ADJUSTED EBIT OF CENTRAL EUROPE MARKET UNIT


|                     |       |                 |       |       |         |         |       |        |       |  |       |       |       | 
|-------------------- | ----- | --------------- | ----- | ----- | ------- | ------- | ----- | ------ | ----- |  | ----- | ----- | ----- | 
|                     |       |                 |       |       |         | Percent |      
|                     |       | 2004            |       |       | 2003(1) |         |       | Change |      
|                     |       |                 |       |       |         |         |       |        |      
|                     |       | ( in millions) |       |       |        
|Central Europe West  |       |                 | 3,311 |       |         |         | 2,819 |        |       |  | +17.5 |      
|                     | Power |                 |       | 2,996 |         |         |       | 2,530  |       |  |       | +18.4 |      
|                     | Gas   |                 |       | 315   |         |         |       | 289    |       |  |       | +9.0  |      
|Central Europe East  |       |                 | 235   |       |         |         | 172   |        |       |  | +36.6 |      
|Other/ Consolidation |       |                 | 56    |       |         |         | (12   | )      |       |  |      |      
|                     |       |                 |       |       |         |         |       |        |      
|                     |       | Total           |       |       | 3,602   |         |       |        | 2,979 |  |       |       | +20.9 | 
|                     |       |                 |       |       |         |         |       |        |      






|    |                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes results of Thüga and the activities transferred to
    the Pan-European Gas market unit and those of E.ON Sverige and
    the other businesses of E.ON Nordic.

          


    


     


  


Pan-European Gas




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.


      




SALES OF PAN-EUROPEAN GAS MARKET UNIT


|                     |       |                 |       |        |         |         |       |        |  |  |       |       | 
|-------------------- | ----- | --------------- | ----- | ------ | ------- | ------- | ----- | ------ |  |  | ----- | ----- | 
|                     |       |                 |       |        |         | Percent |      
|                     |       | 2004            |       |        | 2003(1) |         |       | Change | 
|                     |       |                 |       |        |         |         |       |        | 
|                     |       | ( in millions) |       |        |        
|Up-/ Midstream       |       |                 | 9,274 |        |         |         | 8,360 |        |  |  | +10.9 |      
|Downstream           |       |                 | 1,358 |        |         |         | 1,326 |        |  |  | +2.4  |      
|Other/ Consolidation |       |                 | (328  | )      |         |         | (322  | )      |  |  | -1.9  |      
|                     |       |                 |       |        |         |         |       |        | 
|                     | Total |                 |       | 10,304 |         |         |       | 9,364  |  |  |       | +10.0 | 
|                     |       |                 |       |        |         |         |       |        | 






|    |                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes sales of the former Ruhrgas activities for the period
    from February 1 to December 31 and those of Thüga and
    the other transferred activities for the full year.

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




 




ADJUSTED EBIT OF PAN-EUROPEAN GAS MARKET UNIT


|                         |       |                 |     |       |         |         |     |        |  |  |       |      | 
|------------------------ | ----- | --------------- | --- | ----- | ------- | ------- | --- | ------ |  |  | ----- | ---- | 
|                         |       |                 |     |       |         | Percent |    
|                         |       | 2004            |     |       | 2003(1) |         |     | Change | 
|                         |       |                 |     |       |         |         |     |        | 
|                         |       | ( in millions) |     |       |        
|Up-/ Midstream           |       |                 | 862 |       |         |         | 923 |        |  |  | -6.6  |     
|Downstream Shareholdings |       |                 | 486 |       |         |         | 484 |        |  |  | +0.4  |     
|Other/ Consolidation     |       |                 | (4  | )     |         |         | (6  | )      |  |  | +33.3 |     
|                         |       |                 |     |       |         |         |     |        | 
|                         | Total |                 |     | 1,344 |         |         |     | 1,401  |  |  |       | -4.1 | 
|                         |       |                 |     |       |         |         |     |        | 






|    |                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes results of the former Ruhrgas activities for the period
    from February 1 to December 31 and those of Thüga and
    the other transferred activities for the full year.

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| |     
| | ----
| | U.K.

    




SALES OF U.K. MARKET UNIT


|                       |       |                 |       |       |      |         |       |        |  |  |        |      | 
|---------------------- | ----- | --------------- | ----- | ----- | ---- | ------- | ----- | ------ |  |  | ------ | ---- | 
|                       |       |                 |       |       |      | Percent |      
|                       |       | 2004            |       |       | 2003 |         |       | Change | 
|                       |       |                 |       |       |      |         |       |        | 
|                       |       | ( in millions) |       |       |     
|Non-regulated Business |       |                 | 7,788 |       |      |         | 7,682 |        |  |  | +1.4   |     
|Regulated Business     |       |                 | 941   |       |      |         | 438   |        |  |  | +114.8 |     
|Other/ Consolidation   |       |                 | (239  | )     |      |         | (197  | )      |  |  | -21.3  |     
|                       |       |                 |       |       |      |         |       |        | 
|                       | Total |                 |       | 8,490 |      |         |       | 7,923  |  |  |        | +7.2 | 
|                       |       |                 |       |       |      |         |       |        | 

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ADJUSTED EBIT OF U.K. MARKET UNIT


|                       |       |                 |     |       |      |         |     |        |  |  |        |       | 
|---------------------- | ----- | --------------- | --- | ----- | ---- | ------- | --- | ------ |  |  | ------ | ----- | 
|                       |       |                 |     |       |      | Percent |    
|                       |       | 2004            |     |       | 2003 |         |     | Change | 
|                       |       |                 |     |       |      |         |     |        | 
|                       |       | ( in millions) |     |       |     
|Non-regulated Business |       |                 | 626 |       |      |         | 412 |        |  |  | +51.9  |      
|Regulated Business     |       |                 | 446 |       |      |         | 225 |        |  |  | +98.2  |      
|Other/ Consolidation   |       |                 | (55 | )     |      |         | (27 | )      |  |  | -103.7 |      
|                       |       |                 |     |       |      |         |     |        | 
|                       | Total |                 |     | 1,017 |      |         |     | 610    |  |  |        | +66.7 | 
|                       |       |                 |     |       |      |         |     |        | 

      i.e. 


 


   


Nordic


     




SALES OF NORDIC MARKET UNIT


|        |       |                 |       |       |      |         |       |        |  |  |       |       | 
|------- | ----- | --------------- | ----- | ----- | ---- | ------- | ----- | ------ |  |  | ----- | ----- | 
|        |       |                 |       |       |      | Percent |      
|        |       | 2004            |       |       | 2003 |         |       | Change | 
|        |       |                 |       |       |      |         |       |        | 
|        |       | ( in millions) |       |       |     
|Sweden  |       |                 | 2,714 |       |      |         | 2,216 |        |  |  | +22.5 |      
|Finland |       |                 | 238   |       |      |         | 284   |        |  |  | -16.2 |      
|        |       |                 |       |       |      |         |       |        | 
|        | Total |                 |       | 2,952 |      |         |       | 2,500  |  |  |       | +18.1 | 
|        |       |                 |       |       |      |         |       |        | 

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 




  




ADJUSTED EBIT OF NORDIC MARKET UNIT


|        |       |                 |     |     |      |         |     |        |  |  |       |       | 
|------- | ----- | --------------- | --- | --- | ---- | ------- | --- | ------ |  |  | ----- | ----- | 
|        |       |                 |     |     |      | Percent |    
|        |       | 2004            |     |     | 2003 |         |     | Change | 
|        |       |                 |     |     |      |         |     |        | 
|        |       | ( in millions) |     |     |     
|Sweden  |       |                 | 662 |     |      |         | 484 |        |  |  | +36.8 |      
|Finland |       |                 | 39  |     |      |         | 62  |        |  |  | +37.1 |      
|        |       |                 |     |     |      |         |     |        | 
|        | Total |                 |     | 701 |      |         |     | 546    |  |  |       | +28.4 | 
|        |       |                 |     |     |      |         |     |        | 

      


  


U.S. Midwest


 


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SALES OF U.S. MIDWEST MARKET UNIT


|                       |       |                 |       |       |      |         |       |        |  |  |       |      | 
|---------------------- | ----- | --------------- | ----- | ----- | ---- | ------- | ----- | ------ |  |  | ----- | ---- | 
|                       |       |                 |       |       |      | Percent |      
|                       |       | 2004            |       |       | 2003 |         |       | Change | 
|                       |       |                 |       |       |      |         |       |        | 
|                       |       | ( in millions) |       |       |     
|Regulated Business     |       |                 | 1,643 |       |      |         | 1,663 |        |  |  | -1.2  |     
|Non-regulated Business |       |                 | 75    |       |      |         | 108   |        |  |  | -30.6 |     
|                       |       |                 |       |       |      |         |       |        | 
|                       | Total |                 |       | 1,718 |      |         |       | 1,771  |  |  |       | -3.0 | 
|                       |       |                 |       |       |      |         |       |        | 

  


  


 




ADJUSTED EBIT OF U.S. MIDWEST MARKET UNIT


|                       |       |                 |     |     |      |         |     |        |  |  |       |       | 
|---------------------- | ----- | --------------- | --- | --- | ---- | ------- | --- | ------ |  |  | ----- | ----- | 
|                       |       |                 |     |     |      | Percent |    
|                       |       | 2004            |     |     | 2003 |         |     | Change | 
|                       |       |                 |     |     |      |         |     |        | 
|                       |       | ( in millions) |     |     |     
|Regulated Business     |       |                 | 339 |     |      |         | 306 |        |  |  | +10.8 |      
|Non-regulated Business |       |                 | 15  |     |      |         | 12  |        |  |  | +25.0 |      
|                       |       |                 |     |     |      |         |     |        | 
|                       | Total |                 |     | 354 |      |         |     | 318    |  |  |       | +11.3 | 
|                       |       |                 |     |     |      |         |     |        | 

      


155



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  


Corporate Center


   


Other Activities


  





INFLATION







EXCHANGE RATE EXPOSURE AND CURRENCY RISK MANAGEMENT




 


   


156



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LIQUIDITY AND CAPITAL RESOURCES


   (Versorgungskasse
Energie)


  


     


  


  


157



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E.ON BUSINESS SEGMENT CASH FLOW AND CAPITAL
EXPENDITURES(1)


|                    |                      |                 |       |       |              |  |       |            |       |  |              |       |       |            |       |       |              |  |       |       |       |  |       |       |       | 
|------------------- | -------------------- | --------------- | ----- | ----- | ------------ |  | ----- | ---------- | ----- |  | ------------ | ----- | ----- | ---------- | ----- | ----- | ------------ |  | ----- | ----- | ----- |  | ----- | ----- | ----- | 
|                    |                      | 2005            |       |       | 2004         |  |       | 2003       |      
|                    |                      |                 |       |       |              |  |       |            |      
|                    |                      | Cash from       |       |       | Capital      |  |       | Cash from  |       |  | Capital      |       |       | Cash from  |       |       | Capital      | 
|                    |                      | Operations      |       |       | Expenditures |  |       | Operations |       |  | Expenditures |       |       | Operations |       |       | Expenditures | 
|                    |                      |                 |       |       |              |  |       |            |       |  |              |       |       |            |       |       |              | 
|                    |                      | ( in millions) |      
|Central Europe(2)   |                      |                 | 3,020 |       |              |  | 2,177 |            |       |  | 2,938        |       |       |            | 2,527 |       |              |  | 4,081 |       |       |  | 2,126 |      
|Pan-European Gas(2) |                      |                 | 1,999 |       |              |  | 531   |            |       |  | 903          |       |       |            | 614   |       |              |  | 942   | (3)   |       |  | 611   | (3)  
|U.K.                |                      |                 | 101   |       |              |  | 926   |            |       |  | 633          |       |       |            | 503   |       |              |  | 315   |       |       |  | 388   |      
|Nordic              |                      |                 | 746   |       |              |  | 538   |            |       |  | 957          |       |       |            | 740   |       |              |  | 773   |       |       |  | 1,265 |      
|U.S. Midwest(2)     |                      |                 | 214   |       |              |  | 227   |            |       |  | 152          |       |       |            | 247   |       |              |  | 154   |       |       |  | 411   |      
|Corporate Center(2) |                      |                 | 521   |       |              |  | (62   | )          |       |  | 257          |       |       |            | 478   |       |              |  | (865  | )     |       |  | 4,176 | (4)  
|                    |                      |                 |       |       |              |  |       |            |       |  |              |       |       |            |       |       |              | 
|                    | Core Energy Business |                 |       | 6,601 |              |  |       | 4,337      |       |  |              | 5,840 |       |            |       | 5,109 |              |  |       | 5,400 |       |  |       | 8,977 |      
|                    | Other Activities(2)  |                 |       |      |              |  |       |           |       |  |              |      |       |            |       |      |              |  |       | (93   | )     |  |       | 36    |      
|                    |                      |                 |       |       |              |  |       |            |       |  |              |       |       |            |       |       |              | 
|                    |                      | Total           |       |       | 6,601        |  |       |            | 4,337 |  |              |       | 5,840 |            |       |       | 5,109        |  |       |       | 5,307 |  |       |       | 9,013 | 
|                    |                      |                 |       |       |              |  |       |            |       |  |              |       |       |            |       |       |              | 






|    |                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For a detailed description of capital expenditures by purchases
    of financial assets and purchases of other fixed assets, see
    Note 27 of the Notes to Consolidated Financial Statements.                                                                                               
|   
|(2) | Excludes the cash from operations and capital expenditures of
    certain activities now accounted for as discontinued operations.
    For more details, see  Acquisitions and
    Dispositions  Discontinued Operations and
    Note 4 of the Notes to Consolidated Financial Statements.
|   
|(3) | Includes the cash flows of the former Ruhrgas activities for the
    period from February 1 to December 31 and those of
    Thüga and other transferred activities for the full year.                                                                                                         
|   
|(4) | Includes the acquisition of shares of Ruhrgas in 2003.                                                                                                                                                                                                                                        

Capital Expenditures


                


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


          


        


        


  


    


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





Financial Liabilities.                


e.g.


  


Prime-1,


Expected Investment Activity.     


160



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           




 


  


 


161



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 




Fair Value of Derivatives.




FAIR VALUE RECONCILIATION TABLE


( in
millions)


|                                                                                           |  |  |         |  
|------------------------------------------------------------------------------------------ |  |  | ------- | -
|Fair value of contracts outstanding at the beginning of the
    period                     |  |  | 382.5   |  
|Change to scope of consolidation                                                           |  |  | 20.6    |  
|Contracts realized or otherwise settled during the period                                  |  |  | (166.0  | )
|Fair value of new contracts entered into during the period                                 |  |  | 175.2   |  
|Changes in fair values attributable to changes in valuation
    techniques and assumptions |  |  | 4.7     |  
|Other changes in fair values                                                               |  |  | 1,057.3 |  
|                                                                                           |  |  |        
|Fair value of contracts outstanding at the end of the period                               |  |  | 1,474.3 |  
|                                                                                           |  |  |        



mark-to mark-to


162



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mark-to


SOURCE OF FAIR VALUE TABLE


|                                                   |  |                                       |        |   |           |  |             |           |  |  |           |   |  |            |       |   |  |  |         |  
|-------------------------------------------------- |  | ------------------------------------- | ------ | - | --------- |  | ----------- | --------- |  |  | --------- | - |  | ---------- | ----- | - |  |  | ------- | -
|                                                   |  | Fair Value of Contracts at Period-End |       
|                                                   |  |                                       |       
|                                                   |  | Maturity                              |        |   |           |  | Maturity in |           |  | 
|                                                   |  | less than                             |        |   | Maturity  |  |             | Maturity  |  |  | Excess of |   |  | Total Fair |      
|Source of Fair Value                               |  | 1 Year                                |        |   | 1-3 Years |  |             | 4-5 Years |  |  | 5 Years   |   |  | Value      |      
|                                                   |  |                                       |        |   |           |  |             |           |  |  |           |   |  |            |      
|                                                   |  | ( in millions)                       |       
|Prices actively quoted                             |  |                                       | 710.8  |   |           |  | 877.7       |           |  |  | 106.8     |   |  |            | 0.1   |   |  |  | 1,695.4 |  
|Prices provided by other external sources          |  |                                       | 44.0   |   |           |  | 75.0        |           |  |  | 9.0       |   |  |            | (18.0 | ) |  |  | 110.0   |  
|Prices based on models and other valuation methods |  |                                       | (149.6 | ) |           |  | (180.6      | )         |  |  | (9.6      | ) |  |            | 8.7   |   |  |  | (331.1  | )






RESEARCH AND DEVELOPMENT


  





TREND INFORMATION







PROCESS OF TRANSITION TO INTERNATIONAL FINANCIAL REPORTING
STANDARDS


20-F.


163



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OFF-BALANCE SHEET ARRANGEMENTS




Financial Guarantees.


          


Indemnification Agreements. (Freistellungen)  


164



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 


Other Guarantees.  


Variable Interest Entities.    


  





165



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##### Table of Contents






CONTRACTUAL OBLIGATIONS




|                              |  |                        |         |           |        |  |        |           |           |  |           |  |  |         |        |  |  |  |         | 
|----------------------------- |  | ---------------------- | ------- | --------- | ------ |  | ------ | --------- | --------- |  | --------- |  |  | ------- | ------ |  |  |  | ------- | 
|                              |  | Payments Due by Period |        
|                              |  |                        |        
|                              |  |                        |         | Less than |        |  |        |           | More than | 
|Contractual Obligations       |  | Total                  |         |           | 1 Year |  |        | 1-3 Years |           |  | 3-5 Years |  |  | 5 Years |       
|                              |  |                        |         |           |        |  |        |           |           |  |           |  |  |         |       
|                              |  | ( in millions)        |        
|Financial Liabilities(1)      |  |                        | 14,205  |           |        |  | 3,770  |           |           |  | 915       |  |  |         | 5,148  |  |  |  | 4,372   | 
|Capital Lease Obligations     |  |                        | 157     |           |        |  | 37     |           |           |  | 71        |  |  |         | 9      |  |  |  | 40      | 
|Operating Leases              |  |                        | 577     |           |        |  | 99     |           |           |  | 157       |  |  |         | 125    |  |  |  | 196     | 
|Purchase Obligations          |  |                        | 175,703 |           |        |  | 18,563 |           |           |  | 29,309    |  |  |         | 36,302 |  |  |  | 91,529  | 
|Asset Retirement Obligations  |  |                        | 9,661   |           |        |  | 199    |           |           |  | 364       |  |  |         | 262    |  |  |  | 8,836   | 
|Pension Payments              |  |                        | 9,577   |           |        |  | 865    |           |           |  | 1,804     |  |  |         | 1,899  |  |  |  | 5,009   | 
|Other Long-Term Obligations   |  |                        | 5,431   |           |        |  | 601    |           |           |  | 3,874     |  |  |         | 219    |  |  |  | 737     | 
|                              |  |                        |         |           |        |  |        |           |           |  |           |  |  |         |       
|Total Contractual Obligations |  |                        | 215,311 |           |        |  | 24,134 |           |           |  | 36,494    |  |  |         | 43,964 |  |  |  | 110,719 | 
|                              |  |                        |         |           |        |  |        |           |           |  |           |  |  |         |       






|    |                                    
|--- | -----------------------------------
|(1) | Excludes capital lease obligations.



Purchase Obligations.  






Asset Retirement Obligations.


166



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Other Long-Term Obligations.












|        |                                            
|------- | -------------------------------------------
|Item 6. | Directors, Senior Management and Employees.

DIRECTORS AND SENIOR MANAGEMENT


GENERAL




day-to






SUPERVISORY BOARD (AUFSICHTSRAT)


(Mitbestimmungsgesetz)




167



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|                                                                        |  |     |    |  |                      |                                                                                                                                                                                      |         |  |      | 
|----------------------------------------------------------------------- |  | --- | -- |  | -------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------- |  | ---- | 
|                                                                        |  |     |    |  |                      | Year First                                                                                                                                                                           |        
|Name and Position Held                                                  |  | Age |    |  | Principal Occupation |                                                                                                                                                                                      | Elected | 
|                                                                        |  |     |    |  |                      |                                                                                                                                                                                      |         | 
|Ulrich Hartmann(1)(2)*(3)*
    Chairman of the Supervisory Board        |  |     | 67 |  |                      | Retired Co-Chief Executive Officer of E.ON AG; formerly Chairman
    of the Board of Management and Chief Executive Officer of VEBA AG                                               |         |  | 2003 | 
|                                                                       
|                                                                        |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                                                         |         |  |      | 
|                                                                        |  |     |    |  |                      |                                                                                                                                                                                      |         | 
|                                                                       
|                                                                        |  |     |    |  |                      | Deutsche Bank AG, Deutsche Lufthansa AG, Hochtief AG, IKB
    Deutsche Industriebank AG (Chairman), Münchener
    Rückversicherungs- Gesellschaft AG, Arcelor(4), Henkel
    KGaA(4) |         |  |      | 
|                                                                       
|Hubertus Schmoldt(2)(3)(5)
    Deputy Chairman of the Supervisory Board |  |     | 60 |  |                      | Chairman of the Board of Management of Industriegewerkschaft
    Bergbau, Chemie, Energie                                                                                            |         |  | 1996 | 
|                                                                       
|                                                                        |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                                                         |         |  |      | 
|                                                                        |  |     |    |  |                      |                                                                                                                                                                                      |         | 
|                                                                       
|                                                                        |  |     |    |  |                      | Bayer AG, BHW AG, DOW Olefinverbund GmbH, Deutsche BP AG, RAG
    Aktiengesellschaft                                                                                                 |         |  |      | 
|                                                                       
|Günter Adam(5)
    Member of the Supervisory Board                      |  |     | 47 |  |                      | Chairman of the Central Works Council, Degussa AG                                                                                                                                    |         |  | 2002 | 
|                                                                        |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                                                         |         |  |      | 
|                                                                        |  |     |    |  |                      |                                                                                                                                                                                      |         | 
|                                                                       
|                                                                        |  |     |    |  |                      | Degussa AG                                                                                                                                                                           |         |  |      | 
|                                                                       
|Dr. Karl-Hermann Baumann(1)*
    Member of the Supervisory Board        |  |     | 70 |  |                      | Formerly Chairman of the Supervisory Board of Siemens AG;
    formerly member of the Board of Management of Siemens AG                                                               |         |  | 2000 | 
|                                                                       
|                                                                        |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                                                         |         |  |      | 
|                                                                        |  |     |    |  |                      |                                                                                                                                                                                      |         | 
|                                                                       
|                                                                        |  |     |    |  |                      | Linde AG, Schering AG                                                                                                                                                                |         |  |      | 
|                                                                       
|Dr. Rolf-E. Breuer
    Member of the Supervisory Board                  |  |     | 68 |  |                      | Chairman of the Supervisory Board of Deutsche Bank AG; formerly
    Spokesman of the Board of Management of Deutsche Bank AG                                                         |         |  | 1997 | 
|                                                                       
|                                                                        |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                                                         |         |  |      | 
|                                                                        |  |     |    |  |                      |                                                                                                                                                                                      |         | 
|                                                                       
|                                                                        |  |     |    |  |                      | Landwirtschaftliche Rentenbank(4)                                                                                                                                                    |         |  |      | 
|                                                                       
|Dr. Gerhard Cromme(3)
    Member of the Supervisory Board               |  |     | 62 |  |                      | Chairman of the Supervisory Board of ThyssenKrupp AG                                                                                                                                 |         |  | 1993 | 
|                                                                       
|                                                                        |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                                                         |         |  |      | 
|                                                                        |  |     |    |  |                      |                                                                                                                                                                                      |         | 
|                                                                       
|                                                                        |  |     |    |  |                      | Allianz AG, Axel Springer AG, Deutsche Lufthansa AG, Hochtief
    AG, Siemens AG, Volkswagen AG, Suez S.A.(4), BNP Paribas
    S.A.(4), Compagnie de Saint-Gobain                    |         |  |      | 

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|                                                                     |  |     |    |  |                      |                                                                                                                                             |         |  |      | 
|-------------------------------------------------------------------- |  | --- | -- |  | -------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | ------- |  | ---- | 
|                                                                     |  |     |    |  |                      | Year First                                                                                                                                  |        
|Name and Position Held                                               |  | Age |    |  | Principal Occupation |                                                                                                                                             | Elected | 
|                                                                     |  |     |    |  |                      |                                                                                                                                             |         | 
|                                                                    
|Gabriele Gratz(5)(6)
    Member of the Supervisory Board             |  |     | 57 |  |                      | Chairwoman of the Works Council of E.ON Ruhrgas AG                                                                                          |         |  | 2005 | 
|                                                                    
|                                                                     |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                |         |  |      | 
|                                                                     |  |     |    |  |                      |                                                                                                                                             |         | 
|                                                                    
|                                                                     |  |     |    |  |                      | E.ON Ruhrgas AG                                                                                                                             |         |  |      | 
|                                                                    
|Wolf-Rüdiger Hinrichsen(2)(3)(5)
    Member of the Supervisory Board |  |     | 50 |  |                      | Chairman of the Group Workers Council of E.ON AG                                                                                           |         |  | 1998 | 
|                                                                    
|Ulrich Hocker
    Member of the Supervisory Board                    |  |     | 55 |  |                      | General Manager of the German Investor Protection Association                                                                               |         |  | 1998 | 
|                                                                    
|                                                                     |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                |         |  |      | 
|                                                                     |  |     |    |  |                      |                                                                                                                                             |         | 
|                                                                    
|                                                                     |  |     |    |  |                      | Feri Finance AG, Gildemeister AG, Karstadt Quelle AG,
    ThyssenKrupp Stainless AG, Gartmore SICAV(4), Phoenix Mecano
    AG(4) (Chairman) |         |  |      | 
|                                                                    
|Eva Kirchhof(5)
    Member of the Supervisory Board                  |  |     | 48 |  |                      | Diploma-Physicist, Degussa AG                                                                                                               |         |  | 2002 | 
|                                                                    
|Seppel Kraus(5)
    Member of the Supervisory Board                  |  |     | 52 |  |                      | Secretary of Labor Union                                                                                                                    |         |  | 2003 | 
|                                                                    
|                                                                     |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                |         |  |      | 
|                                                                     |  |     |    |  |                      |                                                                                                                                             |         | 
|                                                                    
|                                                                     |  |     |    |  |                      | Wacker-Chemie AG, UPM-Kymmene Beteiligungs GmbH                                                                                             |         |  |      | 
|                                                                    
|Prof. Dr. Ulrich Lehner
    Member of the Supervisory Board          |  |     | 59 |  |                      | President and Chief Executive Officer, Henkel KGaA                                                                                          |         |  | 2003 | 
|                                                                    
|                                                                     |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                |         |  |      | 
|                                                                     |  |     |    |  |                      |                                                                                                                                             |         | 
|                                                                    
|                                                                     |  |     |    |  |                      | HSBC Trinkaus & Burkhardt KGaA, Ecolab Inc.(4),
    Novartis AG(4), The DIAL Corporation(4) (Chairman)                                      |         |  |      | 
|                                                                    
|Dr. Klaus Liesen
    Member of the Supervisory Board                 |  |     | 74 |  |                      | Honorary Chairman of the Supervisory Board of E.ON Ruhrgas AG;
    formerly Chairman of the Supervisory Board of E.ON Ruhrgas AG            |         |  | 1991 | 
|                                                                    
|                                                                     |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                |         |  |      | 
|                                                                     |  |     |    |  |                      |                                                                                                                                             |         | 
|                                                                    
|                                                                     |  |     |    |  |                      | TUI AG, Volkswagen AG                                                                                                                       |         |  |      | 
|                                                                    
|Erhard Ott(5)(6)
    Member of the Supervisory Board                 |  |     | 52 |  |                      | Member of the Board of Management, Unified Services Sector Union
    (ver.di)                                                               |         |  | 2005 | 
|                                                                    
|Ulrich Otte(1)(5)
    Member of the Supervisory Board                |  |     | 56 |  |                      | Chairman of the Central Works Council, E.ON Energie AG                                                                                      |         |  | 2001 | 
|                                                                    
|                                                                     |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                |         |  |      | 
|                                                                     |  |     |    |  |                      |                                                                                                                                             |         | 
|                                                                    
|                                                                     |  |     |    |  |                      | E.ON Energie AG, E.ON Kraftwerke GmbH                                                                                                       |         |  |      | 
|                                                                    
|Klaus-Dieter Raschke(1)(5)
    Member of the Supervisory Board       |  |     | 52 |  |                      | Chairman of the Combined Works Council, E.ON Energie AG                                                                                     |         |  | 2002 | 
|                                                                    
|                                                                     |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                |         |  |      | 
|                                                                     |  |     |    |  |                      |                                                                                                                                             |         | 
|                                                                    
|                                                                     |  |     |    |  |                      | E.ON Energie AG, E.ON Kernkraft GmbH                                                                                                        |         |  |      | 
|                                                                    
|Dr. Henning Schulte-Noelle(2)
    Member of the Supervisory Board    |  |     | 63 |  |                      | Chairman of the Supervisory Board of Allianz AG; formerly
    Chairman of the Board of Management of Allianz AG                             |         |  | 1993 | 
|                                                                    
|                                                                     |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                |         |  |      | 
|                                                                     |  |     |    |  |                      |                                                                                                                                             |         | 
|                                                                    
|                                                                     |  |     |    |  |                      | Siemens AG, ThyssenKrupp AG                                                                                                                 |         |  |      | 

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|                                                                      |  |     |    |  |                      |                                                                                                                                                              |         |  |      | 
|--------------------------------------------------------------------- |  | --- | -- |  | -------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------- |  | ---- | 
|                                                                      |  |     |    |  |                      | Year First                                                                                                                                                   |        
|Name and Position Held                                                |  | Age |    |  | Principal Occupation |                                                                                                                                                              | Elected | 
|                                                                      |  |     |    |  |                      |                                                                                                                                                              |         | 
|                                                                     
|Prof. Dr. Wilhelm Simson
    Member of the Supervisory Board          |  |     | 67 |  |                      | Retired Co-Chief Executive Officer of E.ON AG; formerly Chairman
    of the Board of Management and Chief Executive Officer of VIAG AG                       |         |  | 2003 | 
|                                                                     
|                                                                      |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                                 |         |  |      | 
|                                                                      |  |     |    |  |                      |                                                                                                                                                              |         | 
|                                                                     
|                                                                      |  |     |    |  |                      | Frankfurter Allgemeine Zeitung GmbH, Merck KGaA (Chairman since
    January 1, 2006), Freudenberg & Co.(4),
    Jungbunzlauer Holding AG(4), E. Merck OHG(4) |         |  |      | 
|                                                                     
|Gerhard Skupke(5)
    Member of the Supervisory Board                 |  |     | 56 |  |                      | Chairman of the Central Works Council, E.ON edis
    Aktiengesellschaft                                                                                      |         |  | 2003 | 
|                                                                     
|                                                                      |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                                 |         |  |      | 
|                                                                      |  |     |    |  |                      |                                                                                                                                                              |         | 
|                                                                     
|                                                                      |  |     |    |  |                      | E.ON edis Aktiengesellschaft                                                                                                                                 |         |  |      | 
|                                                                     
|Dr. Georg Freiherr von Waldenfels
    Member of the Supervisory Board |  |     | 61 |  |                      | Former Minister of Finance of the State of Bavaria; Attorney                                                                                                 |         |  | 2003 | 
|                                                                     
|                                                                      |  |     |    |  |                      | Supervisory Board Memberships/Directorships:                                                                                                                 |         |  |      | 
|                                                                      |  |     |    |  |                      |                                                                                                                                                              |         | 
|                                                                     
|                                                                      |  |     |    |  |                      | Georgsmarienhütte Holding GmbH, GI Ventures AG (Chairman)                                                                                                    |         |  |      | 






|  |                                                        
|- | -------------------------------------------------------
|* | Chairman of the respective Supervisory Board committee.



|    |                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Member of E.ON AGs Audit Committee. For more information,
    see Item 10. Additional Information 
    Memorandum and Articles of Association  Corporate
    Governance  The Supervisory Board Committees.                                                                
|   
|(2) | Member of E.ON AGs Executive Committee, which covers the
    functions of a remuneration committee. For more information, see
    Item 10. Additional Information 
    Memorandum and Articles of Association  Corporate
    Governance  The Supervisory Board Committees.
|   
|(3) | Member of E.ON AGs Finance and Investment Committee. For
    more information, see Item 10. Additional
    Information  Memorandum and Articles of
    Association  Corporate Governance  The
    Supervisory Board Committees.                                           
|   
|(4) | Membership in comparable domestic or foreign supervisory body of
    a commercial enterprise.                                                                                                                                                                                   
|   
|(5) | Elected by the employees.                                                                                                                                                                                                                                                       
|   
|(6) | Member since July 1, 2005. Gabriele Gratz was elected to
    the position held prior to that date by Ralf Blauth; Erhard Ott
    was elected to that formerly held by Peter Obramski.                                                                                           



BOARD OF MANAGEMENT (VORSTAND)




(Prokura)




170



---



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|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |           |  |              |              |  |  |      | 
|------------------------------------------------------------ |  | --- | -- |  | ---------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- |  | ------------ | ------------ |  |  | ---- | 
|                                                             |  |     |    |  |                                    | Year First                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |           |  | Year Current |             
|Name and Title                                               |  | Age |    |  | Business Activities and Experience |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Appointed |  |              | Term Expires | 
|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |           |  |              |              | 
|Dr. Wulf H. Bernotat
    Chairman of the Board of Management |  |     | 57 |  |                                    | Chief Executive Officer; Corporate Communications, Corporate and
    Public Affairs, Investor Relations, Supervisory Board Relations,
    Strategy, Executive Development, Audit; formerly Chairman of the
    Board of Management of Stinnes AG                                                                                                                                                                                                                                                                                                                |           |  | 2003         |              |  |  | 2008 | 
|                                                            
|                                                             |  |     |    |  |                                    | Supervisory Board Memberships/Directorships:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |           |  |              |              |  |  |      | 
|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |           |  |              |              | 
|                                                            
|                                                             |  |     |    |  |                                    | E.ON Energie AG(1) (Chairman), E.ON Ruhrgas AG(1) (Chairman),
    Allianz AG, Metro AG, RAG Aktiengesellschaft (Chairman), E.ON
    Nordic AB(2)(3) (Chairman), E.ON UK plc(2)(3) (Chairman), E.ON
    US Investments Corp.(2)(3) (Chairman), E.ON Sverige AB(2)(3)
    (Chairman)                                                                                                                                                                                                                                                                              |           |  |              |              |  |  |      | 
|                                                            
|Dr. Burckhard Bergmann
    Member of the Board of Management |  |     | 62 |  |                                    | Upstream Business, Market Management, Group Regulatory
    Management; Chairman of the Board of Management and Chief
    Executive Officer of E.ON Ruhrgas AG                                                                                                                                                                                                                                                                                                                                                                                                   |           |  | 2003         |              |  |  | 2008 | 
|                                                            
|                                                             |  |     |    |  |                                    | Supervisory Board Memberships/Directorships:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |           |  |              |              |  |  |      | 
|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |           |  |              |              | 
|                                                            
|                                                             |  |     |    |  |                                    | E.ON Ruhrgas International AG(1) (Chairman), Thüga AG(1)
    (Chairman), Allianz Lebensversicherungs-AG, MAN Ferrostaal AG,
    Jaeger Akustik GmbH & Co.(2) (Chairman),
    Mitteleuropäische Gasleitungsgesellschaft mbH (MEGAL)(2)(3)
    (Chairman), OAO Gazprom(2), E.ON Ruhrgas E & P
    GmbH(2)(3) (Chairman), Trans Europe Naturgas Pipeline GmbH(2)(3)
    (Chairman), E.ON Ruhrgas Transport Management GmbH(2)(3)
    (Chairman), E.ON UK plc(2)(3), ZAO Gerosgaz(2)(3) (Chairman; in
    alternation with a representative of the foreign partner) |           |  |              |              |  |  |      | 
|                                                            
|Dr. Hans Michael Gaul
    Member of the Board of Management  |  |     | 63 |  |                                    | Controlling/Corporate Planning, M&A, Legal Affairs; formerly
    Member of the Board of Management of VEBA AG                                                                                                                                                                                                                                                                                                                                                                                                                                                   |           |  | 1990         |              |  |  | 2007 | 
|                                                            
|                                                             |  |     |    |  |                                    | Supervisory Board Memberships/Directorships:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |           |  |              |              |  |  |      | 
|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |           |  |              |              | 
|                                                            
|                                                             |  |     |    |  |                                    | Degussa AG(1), E.ON Energie AG(1), E.ON Ruhrgas AG(1), Allianz
    Versicherungs-AG, DKV AG, RAG Aktiengesellschaft, STEAG AG,
    Volkswagen AG, E.ON Nordic AB(2)(3), E.ON Sverige AB(2)(3)                                                                                                                                                                                                                                                                                                                                                                   |           |  |              |              |  |  |      | 
|                                                            
|Dr. Manfred Krüper
    Member of the Board of Management     |  |     | 64 |  |                                    | Labor Relations, Personnel, Infrastructure and Services,
    Procurement, Organization; formerly Member of the Board of
    Management of VEBA AG                                                                                                                                                                                                                                                                                                                                                                                                               |           |  | 1996         |              |  |  | 2006 | 

171



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|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                        |           |  |              |              |  |  |      | 
|------------------------------------------------------------ |  | --- | -- |  | ---------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- |  | ------------ | ------------ |  |  | ---- | 
|                                                             |  |     |    |  |                                    | Year First                                                                                                                                                                                                                                                                             |           |  | Year Current |             
|Name and Title                                               |  | Age |    |  | Business Activities and Experience |                                                                                                                                                                                                                                                                                        | Appointed |  |              | Term Expires | 
|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                        |           |  |              |              | 
|                                                            
|                                                             |  |     |    |  |                                    | Supervisory Board Memberships/Directorships:                                                                                                                                                                                                                                           |           |  |              |              |  |  |      | 
|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                        |           |  |              |              | 
|                                                            
|                                                             |  |     |    |  |                                    | E.ON Energie AG(1), Degussa AG(1), equitrust Aktiengesellschaft
    (Chairman), RAG Aktiengesellschaft, RAG Immobilien AG, Victoria
    Versicherung AG, Victoria Lebensversicherung AG, E.ON US
    Investments Corp.(2)(3), E.ON North America, Inc.(2)(3)
    (Chairman)            |           |  |              |              |  |  |      | 
|                                                            
|Dr. Erhard Schipporeit
    Member of the Board of Management |  |     | 56 |  |                                    | Chief Financial Officer; Finance, Accounting, Taxes, IT;
    formerly Member of the Board of Management of VIAG AG (appointed
    in 1997)                                                                                                                                             |           |  | 2000         |              |  |  | 2009 | 
|                                                            
|                                                             |  |     |    |  |                                    | Supervisory Board Memberships/Directorships:                                                                                                                                                                                                                                           |           |  |              |              |  |  |      | 
|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                        |           |  |              |              | 
|                                                            
|                                                             |  |     |    |  |                                    | E.ON Ruhrgas AG(1), Degussa AG(1), Commerzbank AG, Deutsche
    Börse AG, SAP AG, Talanx AG, E.ON Audit Services GmbH(2)(3)
    (Chairman), E.ON IS GmbH (2)(3), E.ON Risk Consulting GmbH(2)(3)
    (Chairman), E.ON UK plc(2)(3), E.ON US Investments Corp.(2)(3),
    HDI V.a.G.(2) |           |  |              |              |  |  |      | 
|                                                            
|Dr. Johannes Teyssen
    Member of the Board of Management   |  |     | 46 |  |                                    | Downstream Business, Market Management, Group Regulatory
    Management; Chairman of the Board of Management and Chief
    Executive Officer of E.ON Energie AG                                                                                                                        |           |  | 2004         |              |  |  | 2008 | 
|                                                            
|                                                             |  |     |    |  |                                    | Supervisory Board Memberships/Directorships:                                                                                                                                                                                                                                           |           |  |              |              |  |  |      | 
|                                                             |  |     |    |  |                                    |                                                                                                                                                                                                                                                                                        |           |  |              |              | 
|                                                            
|                                                             |  |     |    |  |                                    | E.ON Bayern AG(1) (Chairman), E.ON Hanse AG(1) (Chairman),
    Salzgitter AG, E.ON Nordic AB(2)(3), E.ON Sverige AB(2)(3)                                                                                                                                                              |           |  |              |              |  |  |      | 






|    |                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------
|(1) | Group mandate.                                                                                                     
|   
|(2) | Membership in comparable domestic or foreign supervisory body of
    a commercial enterprise.                      
|   
|(3) | Other Group mandate (membership in comparable domestic or
    foreign supervisory body of a commercial enterprise).



COMPENSATION


SUPERVISORY BOARD




| |                                                                 
| | ----------------------------------------------------------------
| | The Compensation System for Members of the Supervisory
    Board

Deutscher Corporate Governance Kodex,


172



---



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Fixed compensation: 


Short-term variable compensation:   


Long-term variable compensation:   









Compensation Paid to Members
of the Supervisory Board


 


173



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|                                                      |          |                |         |           |                |  |          |                |  |  |                 |           |  |       |        |         |  |  |         |           | 
|----------------------------------------------------- | -------- | -------------- | ------- | --------- | -------------- |  | -------- | -------------- |  |  | --------------- | --------- |  | ----- | ------ | ------- |  |  | ------- | --------- | 
|                                                      |          |                |         | Variable  |                |  | Variable |                |  |  |                 |          
|                                                      |          | Fixed          |         |           | Short-Term     |  |          | Long-Term      |  |  | Compensation    |           |  |      
|                                                      |          | Compensation   |         |           | Compensation   |  |          | Compensation   |  |  | for Supervisory |           |  |      
|                                                      |          | for Service on |         |           | for Service on |  |          | for Service on |  |  | Board           |           |  |      
|                                                      |          | E.ONs         |         |           | E.ONs         |  |          | E.ONs         |  |  | Memberships     |           |  |      
|                                                      |          | Supervisory    |         |           | Supervisory    |  |          | Supervisory    |  |  | at Affiliated   |           |  |      
|Name                                                  |          | Board          |         |           | Board          |  |          | Board          |  |  | Companies       |           |  | Total |       
|                                                      |          |                |         |           |                |  |          |                |  |  |                 |           |  |       |       
|                                                      |          | ()            |        
|Ulrich Hartmann                                       |          |                | 165,000 |           |                |  | 91,425   |                |  |  | 126,420         |           |  |       |       |         |  |  | 382,845 |          
|Hubertus Schmoldt                                     |          |                | 110,000 |           |                |  | 60,950   |                |  |  | 84,280          |           |  |       |       |         |  |  | 255,230 |          
|Günter Adam                                           |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       |       |         |  |  | 127,615 |          
|Dr. Karl-Hermann Baumann                              |          |                | 110,000 |           |                |  | 60,950   |                |  |  | 84,280          |           |  |       |       |         |  |  | 255,230 |          
|Ralf Blauth (until June 30, 2005)                     |          |                | 41,250  |           |                |  | 22,856   |                |  |  | 31,605          |           |  |       |       |         |  |  | 95,711  |          
|Dr. Rolf-E. Breuer                                    |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       |       |         |  |  | 127,615 |          
|Dr. Gerhard Cromme                                    |          |                | 82,500  |           |                |  | 45,713   |                |  |  | 63,210          |           |  |       | 51,500 |         |  |  | 242,923 |          
|Gabriele Gratz (from July 1, 2005)                    |          |                | 27,500  |           |                |  | 15,237   |                |  |  | 21,070          |           |  |       | 50,750 |         |  |  | 114,557 |          
|Wolf-Rüdiger Hinrichsen                               |          |                | 82,500  |           |                |  | 45,713   |                |  |  | 63,210          |           |  |       |       |         |  |  | 191,423 |          
|Ulrich Hocker                                         |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       |       |         |  |  | 127,615 |          
|Eva Kirchhof                                          |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       |       |         |  |  | 127,615 |          
|Seppel Kraus                                          |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       |       |         |  |  | 127,615 |          
|Prof. Dr. Ulrich Lehner                               |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       |       |         |  |  | 127,615 |          
|Dr. Klaus Liesen                                      |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       |       |         |  |  | 127,615 |          
|Peter Obramski (until June 30, 2005)                  |          |                | 27,500  |           |                |  | 15,237   |                |  |  | 21,070          |           |  |       | 29,320 |         |  |  | 93,127  |          
|Erhard Ott (from July 1, 2005)                        |          |                | 27,500  |           |                |  | 15,237   |                |  |  | 21,070          |           |  |       |       |         |  |  | 63,807  |          
|Ulrich Otte                                           |          |                | 66,458  |           |                |  | 36,824   |                |  |  | 50,919          |           |  |       | 66,850 |         |  |  | 221,051 |          
|Klaus-Dieter Raschke                                  |          |                | 82,500  |           |                |  | 45,713   |                |  |  | 63,210          |           |  |       | 44,640 |         |  |  | 236,063 |          
|Dr. Henning Schulte-Noelle                            |          |                | 82,500  |           |                |  | 45,713   |                |  |  | 63,210          |           |  |       |       |         |  |  | 191,423 |          
|Prof. Dr. Wilhelm Simson                              |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       |       |         |  |  | 127,615 |          
|Gerhard Skupke                                        |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       | 10,750 |         |  |  | 138,365 |          
|Dr. Georg Freiherr von Waldenfels                     |          |                | 55,000  |           |                |  | 30,475   |                |  |  | 42,140          |           |  |       |       |         |  |  | 127,615 |          
|                                                      |          |                |         |           |                |  |          |                |  |  |                 |           |  |       |       
|                                                      | Subtotal |                |         | 1,455,208 |                |  |          | 806,318        |  |  |                 | 1,114,954 |  |       |        | 253,810 |  |  |         | 3,630,290 | 
|Attendance fees and meeting-related reimbursements(1) |          |                |         |           |                |  |          |                |  |  |                 |           |  |       |        |         |  |  | 128,816 |          
|                                                      |          |                |         |           |                |  |          |                |  |  |                 |           |  |       |       
|                                                      | Total    |                |         | 1,455,208 |                |  |          | 806,318        |  |  |                 | 1,114,954 |  |       |        | 253,810 |  |  |         | 3,759,106 | 
|                                                      |          |                |         |           |                |  |          |                |  |  |                 |           |  |       |       






|    |                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------
|(1) | Attendance fees and meeting-related reimbursements are given as
    an aggregate for all Supervisory Board members.






174



---



##### Table of Contents



BOARD OF MANAGEMENT


The Compensation System for
Members of the Board of Management












i.e.


change-in




175



---



##### Table of Contents







Compensation Paid to Members
of the Board of Management


 


|                       |       |              |           |           |        |  |           |                 |  |  |            |         |            |       |           |            |               |  |           |            |  |  |        |         | 
|---------------------- | ----- | ------------ | --------- | --------- | ------ |  | --------- | --------------- |  |  | ---------- | ------- | ---------- | ----- | --------- | ---------- | ------------- |  | --------- | ---------- |  |  | ------ | ------- | 
|                       |       |              |           |           |        |  |           | Fair Value      |  |  |            |         |           
|                       |       |              |           |           |        |  |           | of SARs         |  |  |            |         | SARs       |      
|                       |       |              |           |           |        |  |           | Granted in      |  |  |            |         | Granted in |      
|                       |       | Fixed Annual |           |           | Annual |  |           | Other           |  |  | 7thTranche |         |            |       |           | 7thTranche |              
|Name                   |       | Compensation |           |           | Bonus  |  |           | Compensation(1) |  |  | in 2005    |         |            | Total |           |            | in 2005       | 
|                       |       |              |           |           |        |  |           |                 |  |  |            |         |            |       |           |            |               | 
|                       |       | ()          |           |           | ()    |  |           | ()             |  |  | ()        |         |            | ()   |           |            | (No. of SARs) | 
|Dr. Wulf H. Bernotat   |       |              | 1,150,000 |           |        |  | 3,180,000 |                 |  |  | 41,412     |         |            |       | 1,350,000 |            |               |  | 5,721,412 |            |  |  | 97,472 |        
|Dr. Burckhard Bergmann |       |              | 700,000   |           |        |  | 1,800,000 |                 |  |  | 28,174     |         |            |       | 800,000   |            |               |  | 3,328,174 |            |  |  | 57,761 |        
|Dr. Hans Michael Gaul  |       |              | 700,000   |           |        |  | 2,100,000 |                 |  |  | 31,113     |         |            |       | 800,000   |            |               |  | 3,631,113 |            |  |  | 57,761 |        
|Dr. Manfred Krüper     |       |              | 700,000   |           |        |  | 1,850,000 |                 |  |  | 31,313     |         |            |       | 800,000   |            |               |  | 3,381,313 |            |  |  | 57,761 |        
|Dr. Erhard Schipporeit |       |              | 700,000   |           |        |  | 1,620,000 |                 |  |  | 41,780     |         |            |       | 800,000   |            |               |  | 3,161,780 |            |  |  | 57,761 |        
|Dr. Johannes Teyssen   |       |              | 700,000   |           |        |  | 1,700,000 |                 |  |  | 43,135     |         |            |       | 800,000   |            |               |  | 3,243,135 |            |  |  | 57,761 |        
|                       |       |              |           |           |        |  |           |                 |  |  |            |         |            |       |           |            |               | 
|                       | Total |              |           | 4,650,000 |        |  |           | 12,250,000      |  |  |            | 216,927 |            |       |           | 5,350,000  |               |  |           | 22,466,927 |  |  |        | 386,277 | 
|                       |       |              |           |           |        |  |           |                 |  |  |            |         |            |       |           |            |               | 






|    |                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Other compensation amounting to approximately
    0.2 million
    (2004:
    0.5 million)
    includes benefits in kind, primarily related to the private use
    of company cars, and attendance fees for Supervisory Board
    memberships at affiliated companies.

i.e.




|                       |  |                   |        |  |                   |  |           |                   |  |  |                   |  |  |             |         |  |           |  |        |             |  |  |           |  |  |  |        |  |  |  |         | 
|---------------------- |  | ----------------- | ------ |  | ----------------- |  | --------- | ----------------- |  |  | ----------------- |  |  | ----------- | ------- |  | --------- |  | ------ | ----------- |  |  | --------- |  |  |  | ------ |  |  |  | ------- | 
|                       |  | Tranche 5 in 2003 |        |  | Tranche 4 in 2002 |  |           | Tranche 3 in 2001 |  |  | Tranche 2 in 2000 | 
|                       |  |                   |        |  |                   |  |           |                   |  |  |                   | 
|                       |  | Exercised         |        |  | Exercise          |  |           | Exercised         |  |  | Exercise          |  |  | Exercised   |         |  | Exercise  |  |        | Exercised   |  |  | Exercise  | 
|                       |  | SARs              |        |  | Gains (1)         |  |           | SARs              |  |  | Gains (1)         |  |  | SARs        |         |  | Gains (1) |  |        | SARs        |  |  | Gains (1) | 
|Name                   |  | No. of SARs       |        |  | ()               |  |           | No. of SARs       |  |  | ()               |  |  | No. of SARs |         |  | ()       |  |        | No. of SARs |  |  | ()       | 
|                       |  |                   |        |  |                   |  |           |                   |  |  |                   |  |  |             |         |  |           |  |        |             |  |  |           | 
|Dr. Wulf H. Bernotat   |  |                   | 40,000 |  |                   |  | 1,547,600 |                   |  |  |                  |  |  |             |        |  |           |  |       |             |  |  |          |  |  |  |       |  |  |  |        | 
|Dr. Burckhard Bergmann |  |                   | 15,000 |  |                   |  | 384,150   |                   |  |  |                  |  |  |             |        |  |           |  |       |             |  |  |          |  |  |  |       |  |  |  |        | 
|Dr. Hans Michael Gaul  |  |                   | 10,000 |  |                   |  | 384,700   |                   |  |  | 40,000            |  |  |             | 698,200 |  |           |  | 25,000 |             |  |  | 399,450   |  |  |  | 10,500 |  |  |  | 201,810 | 
|Dr. Manfred Krüper     |  |                   |       |  |                   |  |          |                   |  |  | 25,000            |  |  |             | 658,250 |  |           |  | 25,000 |             |  |  | 355,500   |  |  |  | 21,000 |  |  |  | 403,620 | 
|Dr. Erhard Schipporeit |  |                   | 30,000 |  |                   |  | 803,900   |                   |  |  | 40,000            |  |  |             | 439,100 |  |           |  | 25,000 |             |  |  | 407,150   |  |  |  |       |  |  |  |        | 
|Dr. Johannes Teyssen   |  |                   | 37,209 |  |                   |  | 1,032,178 |                   |  |  |                  |  |  |             |        |  |           |  | 16,500 |             |  |  | 244,200   |  |  |  |       |  |  |  |        | 

176



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|    |                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The amount paid upon exercise of any SARs is the difference
    between the E.ON AG stock price at the time of exercise and the
    E.ON AG stock price at the time of the SAR issuance, multiplied
    by the number of SARs exercised.

     






EMPLOYEES




|                 |  |                   |        |  |                   |  |        |                   |  |  |        |  |  |         |        |  |         |  |        |       |  |  |         |  |  |         |        |  |  |  |        |  |  |  |        | 
|---------------- |  | ----------------- | ------ |  | ----------------- |  | ------ | ----------------- |  |  | ------ |  |  | ------- | ------ |  | ------- |  | ------ | ----- |  |  | ------- |  |  | ------- | ------ |  |  |  | ------ |  |  |  | ------ | 
|                 |  | Employees at      |        |  | Employees at      |  |        | Employees at      | 
|                 |  | December 31, 2005 |        |  | December 31, 2004 |  |        | December 31, 2003 | 
|                 |  |                   |        |  |                   |  |        |                   | 
|                 |  | Total             |        |  | Germany           |  |        | Foreign           |  |  | Total  |  |  | Germany |        |  | Foreign |  |        | Total |  |  | Germany |  |  | Foreign |       
|                 |  |                   |        |  |                   |  |        |                   |  |  |        |  |  |         |        |  |         |  |        |       |  |  |         |  |  |         |       
|Central Europe   |  |                   | 44,476 |  |                   |  | 30,307 |                   |  |  | 14,169 |  |  |         | 36,811 |  |         |  | 29,208 |       |  |  | 7,603   |  |  |         | 36,576 |  |  |  | 28,611 |  |  |  | 7,965  | 
|Pan-European Gas |  |                   | 13,366 |  |                   |  | 3,411  |                   |  |  | 9,955  |  |  |         | 4,001  |  |         |  | 3,432  |       |  |  | 569     |  |  |         | 4,357  |  |  |  | 3,885  |  |  |  | 472    | 
|U.K.             |  |                   | 12,891 |  |                   |  | 10     |                   |  |  | 12,881 |  |  |         | 10,397 |  |         |  | 6      |       |  |  | 10,391  |  |  |         | 6,541  |  |  |  |       |  |  |  | 6,541  | 
|Nordic           |  |                   | 5,801  |  |                   |  | 2      |                   |  |  | 5,799  |  |  |         | 5,530  |  |         |  | 2      |       |  |  | 5,528   |  |  |         | 6,294  |  |  |  |       |  |  |  | 6,294  | 
|U.S. Midwest     |  |                   | 3,002  |  |                   |  | 2      |                   |  |  | 3,000  |  |  |         | 2,997  |  |         |  | 1      |       |  |  | 2,996   |  |  |         | 3,080  |  |  |  |       |  |  |  | 3,080  | 
|Corporate Center |  |                   | 411    |  |                   |  | 395    |                   |  |  | 16     |  |  |         | 420    |  |         |  | 403    |       |  |  | 17      |  |  |         | 597    |  |  |  | 390    |  |  |  | 207    | 
|                 |  |                   |        |  |                   |  |        |                   |  |  |        |  |  |         |        |  |         |  |        |       |  |  |         |  |  |         |       
|Total            |  |                   | 79,947 |  |                   |  | 34,127 |                   |  |  | 45,820 |  |  |         | 60,156 |  |         |  | 33,052 |       |  |  | 27,104  |  |  |         | 57,445 |  |  |  | 32,886 |  |  |  | 24,559 | 
|                 |  |                   |        |  |                   |  |        |                   |  |  |        |  |  |         |        |  |         |  |        |       |  |  |         |  |  |         |       



 






177



---



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i.e.




 


178



---



##### Table of Contents








STOCK INCENTIVE PLANS











|        |                                                   
|------- | --------------------------------------------------
|Item 7. | Major Shareholders and Related Party Transactions.

MAJOR SHAREHOLDERS










RELATED PARTY TRANSACTIONS




179



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 


 









|        |                       
|------- | ----------------------
|Item 8. | Financial Information.




CONSOLIDATED FINANCIAL STATEMENTS


F-1 F-83.





LEGAL PROCEEDINGS




(Spruchstellenverfahren).


180



---



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20-F













DIVIDEND POLICY









181



---



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SIGNIFICANT CHANGES









|        |                       
|------- | ----------------------
|Item 9. | The Offer and Listing.

GENERAL


(Eurex
Deutschland)





TRADING ON THE NEW YORK STOCK EXCHANGE




|               |           |               |       |       |     |  |       |       | 
|-------------- | --------- | ------------- | ----- | ----- | --- |  | ----- | ----- | 
|               |           | Price per ADS |      
|               |           | ($)(1)        |      
|               |           |               |      
|               |           | High          |       |       | Low | 
|               |           |               |       |       |     | 
|2001           |           |               | 60.50 |       |     |  | 42.03 |      
|2002           |           |               | 58.02 |       |     |  | 39.80 |      
|2003           |           |               | 65.44 |       |     |  | 38.52 |      
|2004           |           |               | 91.15 |       |     |  | 61.72 |      
|First Quarter  |           |               | 68.95 |       |     |  | 61.72 |      
|Second Quarter |           |               | 72.54 |       |     |  | 63.15 |      
|Third Quarter  |           |               | 75.17 |       |     |  | 69.22 |      
|Fourth Quarter |           |               | 91.15 |       |     |  | 73.90 |      
|2005           |           |               | 35.01 |       |     |  | 27.67 |      
|First Quarter  |           |               | 31.01 |       |     |  | 28.21 |      
|Second Quarter |           |               | 29.97 |       |     |  | 27.67 |      
|Third Quarter  |           |               | 33.73 |       |     |  | 29.14 |      
|Fourth Quarter |           |               | 35.01 |       |     |  | 29.15 |      
|               | September |               |       | 33.73 |     |  |       | 30.58 | 
|               | October   |               |       | 31.31 |     |  |       | 29.15 | 
|               | November  |               |       | 31.96 |     |  |       | 29.50 | 
|               | December  |               |       | 35.01 |     |  |       | 31.68 | 
|2006           |           |               |       |       |     |  |       |      
|               | January   |               |       | 37.33 |     |  |       | 35.60 | 
|               | February  |               |       | 38.13 |     |  |       | 36.58 | 






|    |                                                                  
|--- | -----------------------------------------------------------------
|(1) | One E.ON ADS equaled one Ordinary Share until March 28,
    2005.



182



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TRADING ON THE FRANKFURT STOCK EXCHANGE




(Frankfurter Wertpapierbörse)






| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Quarterly reporting;                                                                                                                                                                                     
|
| |  | Application of international accounting standards (either IAS or
    U.S. GAAP);                                                                                                                         
|
| |  | Publication of a financial calendar listing the most important
    corporate events;                                                                                                                     
|
| |  | At least one analysts conference per year; and                                                                                                                                                          
|
| |  | Provision of English language versions of all current reports
    and ad-hoc disclosures required under the German Securities
    Trading Act (Wertpapierhandelsgesetz, or Securities
    Trading Act).



(Orderbuchstatistik) Deutsche
Aktienindex


(Exchange Electronic Trading System)


(Handelsüberwachungsstellen) (Börsenaufsichtsbehörden) Bundesanstalt für Finanzdienstleistungsaufsicht,


183



---



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(Schlusskurse)




|               |           |                |       |       |                  |  |       |       |  |  |          |          |  |  |          |          | 
|-------------- | --------- | -------------- | ----- | ----- | ---------------- |  | ----- | ----- |  |  | -------- | -------- |  |  | -------- | -------- | 
|               |           | Price Per      |       |       |                 
|               |           | Ordinary Share |       |       | DAX 30 Index(1)  | 
|               |           |                |       |       |                  | 
|               |           | High           |       |       | Low              |  |       | High  |  |  | Low      |         
|               |           |                |       |       |                  |  |       |       |  |  |          |         
|               |           | ()            |       |       | ( in thousands) | 
|2001           |           |                | 64.50 |       |                  |  | 64.91 |       |  |  | 6,795.14 |          |  |  | 3,787.23 |         
|2002           |           |                | 59.97 |       |                  |  | 38.16 |       |  |  | 5,462.55 |          |  |  | 2,597.88 |         
|2003           |           |                | 51.74 |       |                  |  | 34.67 |       |  |  | 3,965.16 |          |  |  | 2,202.96 |         
|2004           |           |                | 67.06 |       |                  |  | 49.27 |       |  |  | 4,261.79 |          |  |  | 3,646.99 |         
|First Quarter  |           |                | 56.16 |       |                  |  | 49.27 |       |  |  | 4,151.83 |          |  |  | 3,726.07 |         
|Second Quarter |           |                | 59.63 |       |                  |  | 53.45 |       |  |  | 4,134.10 |          |  |  | 3,754.37 |         
|Third Quarter  |           |                | 60.83 |       |                  |  | 56.85 |       |  |  | 4,035.02 |          |  |  | 3,646.99 |         
|Fourth Quarter |           |                | 67.06 |       |                  |  | 60.05 |       |  |  | 4,261.79 |          |  |  | 3,854.41 |         
|2005           |           |                | 88.92 |       |                  |  | 64.50 |       |  |  | 5,458.58 |          |  |  | 4,178.10 |         
|First Quarter  |           |                | 71.70 |       |                  |  | 64.50 |       |  |  | 4,428.09 |          |  |  | 4,201.81 |         
|Second Quarter |           |                | 73.68 |       |                  |  | 69.60 |       |  |  | 4,627.48 |          |  |  | 4,178.10 |         
|Third Quarter  |           |                | 80.80 |       |                  |  | 72.59 |       |  |  | 5,048.74 |          |  |  | 4,530.18 |         
|Fourth Quarter |           |                | 88.92 |       |                  |  | 72.25 |       |  |  | 5,458.58 |          |  |  | 4,806.05 |         
|               | September |                |       | 80.80 |                  |  |       | 75.69 |  |  |          | 5,048.14 |  |  |          | 4,837.81 | 
|               | October   |                |       | 78.19 |                  |  |       | 72.25 |  |  |          | 5,138.02 |  |  |          | 4,806.05 | 
|               | November  |                |       | 81.29 |                  |  |       | 74.68 |  |  |          | 5,199.48 |  |  |          | 4,922.55 | 
|               | December  |                |       | 88.92 |                  |  |       | 80.44 |  |  |          | 5,458.58 |  |  |          | 5,266.55 | 
|2006           |           |                |       |       |                  |  |       |       |  |  |          |          |  |  |          |         
|               | January   |                |       | 91.93 |                  |  |       | 87.07 |  |  |          | 5,674.15 |  |  |          | 5,334.30 | 
|               | February  |                |       | 96.10 |                  |  |       | 91.95 |  |  |          | 5,915.15 |  |  |          | 5,649.60 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The DAX 30 Index is a continuously updated, capital-weighted
    performance index of 30 German blue chip companies. E.ON
    represented approximately 10.23 percent of the DAX 30 Index
    as of March 6, 2006. In principle, the shares included in the
    DAX 30 Index were selected on the basis of their stock exchange
    turnover and their market capitalization. Adjustments of the DAX
    30 Index are made for capital changes, subscription rights and
    dividends.









|         |                        
|-------- | -----------------------
|Item 10. | Additional Information.




MEMORANDUM AND ARTICLES OF ASSOCIATION


Organization, Register and
Entry Number




184



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Objects and Purposes


(Satzung)








Corporate Governance






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The annual general meeting of shareholdersratifies the
    actions of the corporations supervisory board and board of
    management. It decides, among other things, on the amount of the
    annual dividend, the appointment of an independent auditor and
    certain significant corporate transactions. In corporations with
    more than 2,000 employees, shareholders and employees elect or
    appoint an equal number of representatives to the supervisory
    board. The annual general meeting must be held within the first
    eight months of each fiscal year.
|
| |  | The supervisory boardappoints and removes the members of
    the board of management and oversees the management of the
    corporation. Although prior approval of the supervisory board
    may be required in connection with certain significant matters,
    the law prohibits the supervisory board from making management
    decisions.                                                                                                                                                                                                                                   
|
| |  | The board of managementmanages the corporations
    business and represents it in dealings with third parties. The
    board of management submits regular reports to the supervisory
    board about the corporations operations and business
    strategies, and prepares special reports upon request. A person
    may not serve on the board of management and the supervisory
    board of a corporation at the same time.                                                                                                                                                

(Transparenz- und
Publizitätsgesetz)




185



---



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Cooperation between the Board of Management and the
Supervisory Board.






Conflicts of Interest.




The Supervisory Board Committees. (Mitbestimmungsgesetz)


186



---



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i.e.






20-F






Measures Relating to the Sarbanes-Oxley Act. non-U.S.


187



---



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In addition to E.ONs general Code of Conduct for all
    employees, the Company has developed a special Code of Ethics
    for members of the Board of Management and senior financial
    officers and published the text on its corporate website at
    www.eon.com. Material appearing on the website is not
    incorporated by reference in this annual report. This code
    obliges these managers to make full, appropriate, accurate,
    timely and understandable disclosure of information both in the
    documents E.ON submits to the SEC and in its other corporate
    publications.
|
| |  | In accordance with an SEC recommendation, E.ON has established a
    Disclosure Committee that is responsible for ensuring that
    effective procedures and control mechanisms for financial
    reporting are in place and for providing a correct and timely
    presentation of information to the financial markets. The
    committee is comprised of seven members from various sectors of
    E.ON AG who have a good overview of the Group and the processing
    of information relating to the quarterly reports and annual
    financial statements.                                       

20-F


Certain Provisions with
Respect to Board Members




Ordinary Shares




Dividends.


188



---



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(Bilanzgewinn).


(elektronischer Bundesanzeiger)


Voting Rights.




| |   |                                                                                           
| | - | ------------------------------------------------------------------------------------------
| |  | amending the articles of association to alter the objects and
    purposes of the company;
|
| |  | increasing or reducing the share capital;                                                 
|
| |  | excluding preemptive rights of shareholders to subscribe for new
    shares;              
|
| |  | dissolving the corporation;                                                               
|
| |  | merging the corporation into, or consolidating the corporation
    with, another company; 
|
| |  | transferring all or virtually all of the corporations
    assets; and                    
|
| |  | changing corporate form.                                                                  

Shareholder Rights in Liquidation.


Redemption.


Preemptive Rights. (Bezugsrecht)




Changes in Rights of
Shareholders




Shareholders
Meetings


(Depotbank)


189



---



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| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | election of members of the Supervisory Board (other than those
    elected by the employees);
|
| |  | amendment of the Articles of Association;                                                    
|
| |  | measures to increase or reduce share capital;                                                
|
| |  | mergers and similar transactions; and                                                        
|
| |  | resolutions regarding the dissolution of the Company.                                        

(elektronischer Bundesanzeiger)






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | register in text form in the German or English language no later
    than the end of the seventh day prior to the day of the
    shareholders meeting; and                                                                                                                                                                                                                                                                                                                                 
|
| |  | prove their right to participate in the shareholders
    meeting and to exercise the voting right. This must occur by the
    end of the seventh day prior to the day of the
    shareholders meeting by presenting proof of the
    shareholding in text form in the German or English language
    issued by the institution where the shares are deposited. Such
    proof of shareholding must relate to the beginning of the
    twenty-first day prior to the shareholders meeting.





Transparency and Corporate
Reporting




190



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| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Quarterly reports;                                                                                                                                 
|
| |  | Annual reports prepared in accordance with German law (in both
    German and English);                                                            
|
| |  | The Annual Report on
    Form 20-F;                                                                                                                
|
| |  | A press conference at the time of release of the German annual
    report; and                                                                     
|
| |  | Telephone conferences for analysts following the release of
    quarterly or annual results, as well as other investor relations
    presentations.



ad hoc 6-K.


Foreign Share
Ownership




Change of Control
Provisions




Disclosure of
Shareholdings




(Wertpapiererwerbs- und
Übernahmegesetz)




191



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


Changes in Capital


(Genehmigtes Kapital) (Bedingtes Kapital)


Authorized and Conditional Capital. 







Share Buyback.


192



---



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Significant
Differences in Corporate Governance Practices for Purposes of
Section 303A.11 of the New York Stock Exchange Listed
Company Manual (the NYSE Manual)


(Aktiengesellschaften)


E.ONs Implementation of the German Corporate Governance
Code.


(Vorstand) (Aufsichtsrat)


i.e.




A German Stock Corporation is Required to Have a
Two-Tier Board System.




193



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The Committees Required by the NYSE Manual are Not Required
Under the Stock Corporation Act or the Code.




E.ONs Audit Committee is Not Subject to All of the
Requirements the NYSE Manual Applies to U.S. Companies.


194



---



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MATERIAL CONTRACTS









EXCHANGE CONTROLS


(Deutsche Bundesbank)


195



---



##### Table of Contents



   





TAXATION










TAXATION OF GERMAN CORPORATIONS




196



---



##### Table of Contents





TAXATION OF DIVIDENDS










REFUND PROCEDURES


Bundesamt für Finanzen




197



---



##### Table of Contents



19114-0447.




(Datenträgerverfahren) Bundesamt für Finanzen


Bundesamt für Finanzen




Bundesamt für Finanzen Bundesamt für Finanzen




TAXATION OF CAPITAL GAINS






GIFT AND INHERITANCE TAXES




198



---



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OTHER GERMAN TAXES




INFORMATION REPORTING AND BACKUP WITHHOLDING


U.S.-related non-U.S. U.S.-related





DOCUMENTS ON DISPLAY


1-800-SEC-0330.







|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 11. | Quantitative and Qualitative Disclosures about Market
    Risk.



Risk Identification and
Analysis




199



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Foreign Exchange and
Interest Rate Risk Management Principles








Foreign Exchange Rate Risk
Management






200



---



##### Table of Contents



   






Total
Volume of Foreign Currency Derivatives as of December 31,
2005 and December 31, 2004


|                                   |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |       |       |  |  |      |      |  |  |       |       | 
|---------------------------------- | ----------------- | ----------------- |  | ------- | ----------------- |  | ------ | ------- | ----- | - | ------- | ----- | ---- | ------- | ------ | ----- | ----- |  |  | -------- | -------- |  | ------- | ----- | ----- |  |  | ---- | ---- |  |  | ----- | ----- | 
|                                   |                   | December 31, 2005 |  |         | December 31, 2004 | 
|                                   |                   |                   |  |         |                   | 
|                                   |                   |                   |  | 1-day   |                   |  | 10-day |         |       |   |         | 1-day |      |         | 10-day |      
|                                   |                   | Nominal           |  |         | Fair              |  |        | Value-  |       |   | Value-  |       |      | Nominal |        |       | Fair  |  |  | Value-   |          |  | Value-  |      
|                                   |                   | Value             |  |         | Value             |  |        | at-Risk |       |   | at-Risk |       |      | Value   |        |       | Value |  |  | at-Risk  |          |  | at-Risk |      
|                                   |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |      
|                                   |                   | ( in millions)   | 
|FX forward transactions            |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |       |       |  |  |      |      |  |  |      
|                                   | Buy               |                   |  | 4,091.3 |                   |  |        | 79.2    |       |   |         | 16.9  |      |         |        | 53.4  |       |  |  | 4,238.2  |          |  |         | (41.3 | )     |  |  | 11.0 |      |  |  | 33.0  |      
|                                   | Sell              |                   |  | 8,331.2 |                   |  |        | (81.7   | )     |   |         | 23.6  |      |         |        | 74.6  |       |  |  | 5,328.6  |          |  |         | 134.2 |       |  |  | 11.8 |      |  |  | 35.4  |      
|FX currency options                |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |       |       |  |  |      |      |  |  |      
|                                   | Buy               |                   |  | 227.7   |                   |  |        | 32.8    |       |   |         | 0.2   |      |         |        | 0.6   |       |  |  | 782.7    |          |  |         | 46.7  |       |  |  | 1.3  |      |  |  | 3.9   |      
|                                   | Sell              |                   |  | 139.6   |                   |  |        | (39.0   | )     |   |         | 0.4   |      |         |        | 1.3   |       |  |  | 422.2    |          |  |         | (36.4 | )     |  |  | 0.4  |      |  |  | 1.2   |      
|                                   |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |      
|                                   |                   | Subtotal          |  |         | 12,789.8          |  |        |         | (8.7  | ) |         |       | 8.5  |         |        |       | 26.9  |  |  |          | 10,771.7 |  |         |       | 103.2 |  |  |      | 3.1  |  |  |       | 9.3   | 
|                                   |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |      
|(Remaining maturities)             |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |       |       |  |  |      |      |  |  |      
|Cross currency swaps               |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |       |       |  |  |      |      |  |  |      
|                                   | up to 1 year      |                   |  | 1,734.7 |                   |  |        | 34.7    |       |   |         | 1.9   |      |         |        | 6.0   |       |  |  | 499.1    |          |  |         | (7.0  | )     |  |  | 2.3  |      |  |  | 6.9   |      
|                                   | 1 year to 5 years |                   |  | 8,163.2 |                   |  |        | 57.8    |       |   |         | 34.6  |      |         |        | 109.3 |       |  |  | 11,033.7 |          |  |         | 484.2 |       |  |  | 33.4 |      |  |  | 100.2 |      
|                                   | more than 5 years |                   |  | 6,358.4 |                   |  |        | 66.6    |       |   |         | 8.7   |      |         |        | 27.5  |       |  |  | 7,163.8  |          |  |         | 236.3 |       |  |  | 12.0 |      |  |  | 36.0  |      
|Interest rate/cross currency swaps |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |       |       |  |  |      |      |  |  |      
|                                   | up to 1 year      |                   |  | 125.0   |                   |  |        | 13.1    |       |   |         | 0.5   |      |         |        | 1.6   |       |  |  | 102.3    |          |  |         | 1.4   |       |  |  | 0.5  |      |  |  | 1.5   |      
|                                   | 1 year to 5 years |                   |  | 316.4   |                   |  |        | 5.0     |       |   |         | 2.3   |      |         |        | 7.3   |       |  |  | 125.0    |          |  |         | 12.1  |       |  |  | 0.5  |      |  |  | 1.5   |      
|                                   | more than 5 years |                   |  |        |                   |  |        |        |       |   |         |      |      |         |        |      |       |  |  | 297.4    |          |  |         | (38.5 | )     |  |  | 2.5  |      |  |  | 7.5   |      
|                                   |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |      
|                                   |                   | Subtotal          |  |         | 16,697.7          |  |        |         | 177.2 |   |         |       | 40.6 |         |        |       | 128.3 |  |  |          | 19,221.3 |  |         |       | 688.5 |  |  |      | 44.9 |  |  |       | 134.7 | 
|                                   |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |      
|                                   |                   | Total             |  |         | 29,487.5          |  |        |         | 168.5 |   |         |       | 48.0 |         |        |       | 151.7 |  |  |          | 29,993.0 |  |         |       | 791.7 |  |  |      | 44.6 |  |  |       | 133.8 | 
|                                   |                   |                   |  |         |                   |  |        |         |       |   |         |       |      |         |        |       |       |  |  |          |          |  |         |      



201



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10-day 10-day






Interest Rate Risk
Management











202



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| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Total Volume of Interest Rate Derivatives as of
    December 31, 2005 and December 31, 2004

|                      |                     |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |      |        |       |   |     |      |     |  |     |      |      | 
|--------------------- | ------------------- | ---------------------- | -------- | ----- | ----------------- | ------- | ------ | ------- | ----- | ----- | ------- | ----- | --- | ------- | ------ | - | ----- | ---- |  | ------- | ------- | ------- | ------- | ---- | ------ | ----- | - | --- | ---- | --- |  | --- | ---- | ---- | 
|                      |                     | December 31, 2005      |          |       | December 31, 2004 |        
|                      |                     |                        |          |       |                   |        
|                      |                     |                        |          | 1-day |                   |         | 10-day |         |       |       |         | 1-day |     |         | 10-day |  
|                      |                     | Nominal                |          |       | Fair              |         |        | Value-  |       |       | Value-  |       |     | Nominal |        |   | Fair  |      |  | Value-  |         |         | Value-  |     
|                      |                     | Value                  |          |       | Value             |         |        | at-Risk |       |       | at-Risk |       |     | Value   |        |   | Value |      |  | at-Risk |         |         | at-Risk |     
|                      |                     |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |     
|                      |                     | ( in millions)        |         
|                      |                     | (Remaining maturities) |         
|Interest rate swaps   |                     |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |      |        |       |   |     |      |     |  |    
|                      | fixed-rate payer    |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |      |        |       |   |     |      |     |  |     |     
|                      |                     | up to 1 year           |          |       | 612.2             |         |        |         | (11.8 | )     |         |       | 0.1 |         |        |   | 0.3   |      |  |         | 371.0   |         |         |      | (5.4   | )     |   |     | 0.1  |     |  |     | 0.3  |     
|                      |                     | 1 year to 5 years      |          |       | 1,294.9           |         |        |         | (44.1 | )     |         |       | 1.4 |         |        |   | 4.4   |      |  |         | 2,092.5 |         |         |      | (107.9 | )     |   |     | 3.1  |     |  |     | 9.3  |     
|                      |                     | more than 5 years      |          |       | 1,033.5           |         |        |         | (18.0 | )     |         |       | 4.0 |         |        |   | 12.6  |      |  |         | 373.3   |         |         |      | (36.6  | )     |   |     | 0.8  |     |  |     | 2.4  |     
|                      | fixed-rate receiver |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |      |        |       |   |     |      |     |  |     |     
|                      |                     | up to 1 year           |          |       | 0.0               |         |        |         | 0.0   |       |         |       | 0.0 |         |        |   | 0.0   |      |  |         | 23.3    |         |         |      | 0.3    |       |   |     | 0.0  |     |  |     | 0.0  |     
|                      |                     | 1 year to 5 years      |          |       | 5,364.4           |         |        |         | 64.3  |       |         |       | 7.7 |         |        |   | 24.3  |      |  |         | 3,914.0 |         |         |      | 100.6  |       |   |     | 10.4 |     |  |     | 31.2 |     
|                      |                     | more than 5 years      |          |       | 1,196.4           |         |        |         | (20.7 | )     |         |       | 4.4 |         |        |   | 13.9  |      |  |         | 147.0   |         |         |      | 4.5    |       |   |     | 0.5  |     |  |     | 1.5  |     
|                      |                     |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |     
|                      |                     |                        | Subtotal |       |                   | 9.501.4 |        |         |       | (30.3 | )       |       |     | 6.6     |        |   |       | 20.9 |  |         |         | 6,921.1 |         |      |        | (44.5 | ) |     |      | 6.7 |  |     |      | 20.1 | 
|                      |                     |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |     
|Interest rate options |                     |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |      |        |       |   |     |      |     |  |    
|                      | Buy up to 1 year    |                        |          |      |                   |         |        |        |       |       |         |      |     |         |        |  |       |      |  | 554.6   |         |         |         | (7.2 | )      |       |   | 0.1 |      |     |  | 0.3 |     
|                      |                     | 1 year to 5 years      |          |       |                  |         |        |         |      |       |         |       |    |         |        |   |      |      |  |         |        |         |         |      |       |       |   |     |     |     |  |     |     |     
|                      |                     | more than 5 years      |          |       |                  |         |        |         |      |       |         |       |    |         |        |   |      |      |  |         |        |         |         |      |       |       |   |     |     |     |  |     |     |     
|                      | Sell up to 1 year   |                        |          |      |                   |         |        |        |       |       |         |      |     |         |        |  |       |      |  | 110.9   |         |         |         | (2.0 | )      |       |   | 0.0 |      |     |  | 0.0 |     
|                      |                     | 1 year to 5 years      |          |       |                  |         |        |         |      |       |         |       |    |         |        |   |      |      |  |         |        |         |         |      |       |       |   |     |     |     |  |     |     |     
|                      |                     | more than 5 years      |          |       |                  |         |        |         |      |       |         |       |    |         |        |   |      |      |  |         |        |         |         |      |       |       |   |     |     |     |  |     |     |     
|                      |                     |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |     
|                      |                     |                        | Subtotal |       |                   | 0.0     |        |         |       | 0.0   |         |       |     |        |        |   |       |     |  |         |         | 665.5   |         |      |        | (9.2  | ) |     |      | 0.2 |  |     |      | 0.6  | 
|                      |                     |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |     
|                      |                     |                        | Total    |       |                   | 9,501.4 |        |         |       | (30.3 | )       |       |     | 6.6     |        |   |       | 20.9 |  |         |         | 7,586.6 |         |      |        | (53.7 | ) |     |      | 6.7 |  |     |      | 20.1 | 
|                      |                     |                        |          |       |                   |         |        |         |       |       |         |       |     |         |        |   |       |      |  |         |         |         |         |     





   


Commodity Price Risk
Management




203



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2


 


   


Counterparty Risk From the
Use of Derivative Financial Instruments


   


204



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|         |                                                        
|-------- | -------------------------------------------------------
|Item 12. | Description of Securities Other than Equity Securities.






PART II







|         |                                                 
|-------- | ------------------------------------------------
|Item 13. | Defaults, Dividend Arrearages and Delinquencies.








|         |                                                                                  
|-------- | ---------------------------------------------------------------------------------
|Item 14. | Material Modifications to the Rights of Security Holders and
    Use of Proceeds.








|         |                         
|-------- | ------------------------
|Item 15. | Controls and Procedures.










|          |                                  
|--------- | ---------------------------------
|Item 16A. | Audit Committee Financial Expert.








|          |                
|--------- | ---------------
|Item 16B. | Code of Ethics.



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|          |                                        
|--------- | ---------------------------------------
|Item 16C. | Principal Accountant Fees and Services.





|                   |  |                   |      |  |                   |  |      | 
|------------------ |  | ----------------- | ---- |  | ----------------- |  | ---- | 
|                   |  | Year Ended        |      |  | Year Ended        | 
|Type of Fees       |  | December 31, 2005 |      |  | December 31, 2004 | 
|                   |  |                   |      |  |                   | 
|                   |  | ( in millions)   |     
|Audit Fees         |  |                   | 39.8 |  |                   |  | 41.4 | 
|Audit-Related Fees |  |                   | 9.7  |  |                   |  | 11.4 | 
|Tax Fees           |  |                   | 1.4  |  |                   |  | 1.7  | 
|All Other Fees     |  |                   | 1.1  |  |                   |  | 4.8  | 
|                   |  |                   |      |  |                   | 
|Total              |  |                   | 52.0 |  |                   |  | 59.3 | 
|                   |  |                   |      |  |                   | 



| |                                      
| | -------------------------------------
| | Audit Committee Pre-Approval Policies









| |               
| | --------------
| | Audit Services



| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Annual audit for E.ONs Consolidated Financial Statements;                                                                                             
|
| |  | Quarterly review of E.ONs interim financial statements;                                                                                               
|
| |  | Statutory audits of financial statements of E.ON AG and of its
    subsidiaries under the rules of their respective countries;                         
|
| |  | Attestation of internal controls as part of the external
    audit; and                                                                                
|
| |  | Attestation of regulatory filing and other compliance
    requirements, including regulatory advice, such as carve-out
    reports and comfort letters.

206



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Audit-Related
Services




| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | Accounting advice relating to transactions or events;                                  
|
| |  | Due diligence relating to acquisitions, dispositions and
    contemplated transactions;
|
| |  | Consultation in accounting and corporate reporting matters;                            
|
| |  | Attestation of compliance with provisions or calculations
    required by agreements;  
|
| |  | Employee benefit plan audits;                                                          
|
| |  | Agreed-upon procedures engagements; and                                                
|
| |  | Advisory services relating to internal controls and systems
    documentation.         

Tax Services




| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | Tax compliance services, including return preparation and tax
    payment planning;
|
| |  | Tax advice relating to transactions or events;                                     
|
| |  | Expatriate employee tax services;                                                  
|
| |  | Transfer pricing studies; and                                                      
|
| |  | Tax services for employee benefit plans.                                           

All Other Services




| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | Advisory services on corporate governance and risk management;           
|
| |  | Advisory services on corporate treasury processes and systems;           
|
| |  | Advisory services on information systems; and                            
|
| |  | Educational and training services on accounting and industry
    matters.








|          |                                                                
|--------- | ---------------------------------------------------------------
|Item 16D. | Exemptions from the Listing Standards for Audit
    Committees.



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|          |                                                                            
|--------- | ---------------------------------------------------------------------------
|Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated
    Purchasers.



|          |  |                  |         |  |                    |                     |       |                   |                     |  |                        |  |  |  |            | 
|--------- |  | ---------------- | ------- |  | ------------------ | ------------------- | ----- | ----------------- | ------------------- |  | ---------------------- |  |  |  | ---------- | 
|          |  |                  |         |  |                    | Total Number of     |       |                   | Maximum Number of   | 
|          |  |                  |         |  |                    | Shares Purchased as |       |                   | Shares that may yet | 
|          |  | Total Number of  |         |  | Average Price Paid |                     |       | Part of the Share |                     |  | be Purchased under the | 
|          |  | Shares Purchased |         |  | per Share in      |                     |       | Buyback Plan      |                     |  | Share Buyback Plan     | 
|2005      |  | (a)              |         |  | (b)                |                     |       | (c)               |                     |  | (d)                    | 
|          |  |                  |         |  |                    |                     |       |                   |                     |  |                        | 
|Jan. 1-31 |  |                  | 28,532  |  |                    |                     | 67.70 |                   |                     |  |                       |  |  |  | 36,324,871 | 
|Feb. 1-28 |  |                  |        |  |                    |                     |      |                   |                     |  |                       |  |  |  | 36,353,403 | 
|Mar. 1-31 |  |                  | 1,880   |  |                    |                     | 65.20 |                   |                     |  |                       |  |  |  | 36,353,403 | 
|Apr. 1-30 |  |                  | 5,112   |  |                    |                     | 67.23 |                   |                     |  |                       |  |  |  | 36,353,403 | 
|May 1-31  |  |                  | 450,000 |  |                    |                     | 66.59 |                   |                     |  |                       |  |  |  | 35,903,408 | 
|Jun. 1-30 |  |                  | 132     |  |                    |                     | 71.41 |                   |                     |  |                       |  |  |  | 35,903,408 | 
|Jul. 1-31 |  |                  | 36,255  |  |                    |                     | 72.78 |                   |                     |  |                       |  |  |  | 36,535,476 | 
|Aug. 1-31 |  |                  | 13      |  |                    |                     | 78.30 |                   |                     |  |                       |  |  |  | 36,535,476 | 
|Sep. 1-30 |  |                  | 150,000 |  |                    |                     | 76.97 |                   |                     |  |                       |  |  |  | 36,203,506 | 
|Oct. 1-31 |  |                  |        |  |                    |                     |      |                   |                     |  |                       |  |  |  | 36,203,506 | 
|Nov. 1-30 |  |                  | 158,635 |  |                    |                     | 75.14 |                   |                     |  |                       |  |  |  | 36,353,506 | 
|Dec. 1-31 |  |                  |        |  |                    |                     |      |                   |                     |  |                       |  |  |  | 36,353,552 | 
|          |  |                  |         |  |                    |                     |       |                   |                     |  |                        | 
|Total     |  |                  | 830,559 |  |                    |                     | 70.44 |                   |                     |  |                       |  |  |  |            | 
|          |  |                  |         |  |                    |                     |       |                   |                     |  |                        | 






|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)    | 308,555 Ordinary Shares were purchased for the Companys
    employee share purchase programs, 486,255 Ordinary Shares were
    purchased by E.ON Energie for the squeeze-out of Contigas
    minority shareholders, 35,736 Ordinary Shares were purchased in
    connection with claims made by certain former shareholders of
    Stinnes AG and 13 Ordinary Shares were purchased in connection
    with pre-existing conversion claims of certain former
    shareholders of Gelsenberg AG. All of these purchases were made
    in the market. In April 2005, E.ON started a squeeze-out
    proceeding for the remaining 1.13 percent of Contigas
    shares not held by E.ON at that time. Shareholders could have
    accepted a voluntary conversion offer of either
    80 in cash for
    one Contigas share or
    85 for each
    Contigas share paid in E.ON shares until June 27, 2005.
    0.91 percent of shareholders accepted this offer; the
    remaining 0.22 percent were indemnified by means of a cash
    compensation agreed upon in the squeeze-out resolution. Any
    legal challenges were settled as of October 27, 2005. In
    February 2005, E.ON finalized an agreement with certain former
    shareholders of Stinnes AG in relation to share exchange claims
    (Spruchstellenverfahren) made at the time of
    Stinnes acquisition by VEBA AG. Claims with respect to the
    acquisition may still be made by additional former minority
    shareholders of Stinnes AG, and E.ON may purchase additional
    Ordinary Shares if and when such further claims are presented.
    Gelsenberg AG was merged into the former VEBA AG in 1978; its
    shareholders had the option to receive VEBA shares or cash
    against delivery of their Gelsenberg shares. In August 2005,
    some former Gelsenberg AG shareholders presented Gelsenberg AG
    shares requesting an aggregate of 13 E.ON Ordinary Shares.
|      
|(c)(d) | Pursuant to shareholder resolutions approved at the annual
    general meeting of shareholders held on April 27, 2005, the
    Board of Management is authorized to buy back up to
    10 percent of E.ON AGs outstanding share capital, or
    692,000,000 Ordinary Shares, through October 27, 2006.
    Pursuant to the German Stock Corporation Act, the maximum number
    of shares the Company may purchase at any time equals
    10 percent of 692,000,000 (or 69,200,000 Ordinary Shares)
    less the number of Ordinary Shares held in treasury stock at
    such time. Therefore, the maximum number of Ordinary Shares that
    may be purchased under the Companys share buyback plan, as
    reflected in column D, fluctuated over the course of 2005 due to
    changes in the number of Ordinary Shares held in treasury stock,
    rather than due to share repurchases. The Company did not buy
    back any Ordinary Shares pursuant to this share buyback plan in
    2005, as the shares purchased for the employee share purchase
    programs, the Contigas squeeze out and the Stinnes integration
    were not purchased pursuant to such plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



208



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PART III







|         |                      
|-------- | ---------------------
|Item 17. | Financial Statements.








|         |                      
|-------- | ---------------------
|Item 18. | Financial Statements.








|         |          
|-------- | ---------
|Item 19. | Exhibits.

|            |      |               |  |                                                                                                                                                                                                                                                                                                                         
|----------- | ---- | ------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      | Exhibit Title
|            |      |              
|            | 1.1  |               |  | English translation of the Articles of Association (Satzung)of E.ON AG as amended to date.*                                                                                                                                                                                                                             
|           
|            | 4.1  |               |  | Unofficial English translation of Framework Agreement between
    RAG AG, RAG Beteiligungs-GmbH, RAG Projektgesellschaft mbH and
    EBV Aktiengesellschaft, and E.ON AG, Chemie Verwaltungs AG and
    E.ON Vermögensanlage GmbH, dated May 20, 2002.**                                                                
|           
|            | 4.2  |               |  | Amended and Restated Fiscal Agency Agreement between E.ON AG,
    E.ON International Finance B.V., E.ON UK PLC, and Citibank, N.A.
    as Fiscal Agent, and Banque du Luxembourg S.A. and Citibank AG
    as Paying Agents, relating to the Euro 20,000,000,000 Medium
    Term Note Programme, dated August 21, 2002.**
|           
|            | 4.3  |               |  | Sale and Purchase Agreement Regarding the Sale and Purchase of
    All Shares in Viterra AG between E.ON
    Viterra-Beteiligungsgesellschaft mbH, E.ON AG, Atrium
    Einhunderterste VV GmbH and Praetorium 40. VV GmbH, dated
    May 17, 2005.*                                                                    
|           
|            | 4.4  |               |  | Unofficial English translation of Current Form of Management
    Board Service Agreement.***                                                                                                                                                                                                                            
|           
|            | 4.5  |               |  | Schedule 1 to Exhibit 4.4  Individual
    Deviations from Form of Management Board Service Agreement.***                                                                                                                                                                                                               
|           
|            | 8.1  |               |  | Subsidiaries as of the end of the year covered by this annual
    report: see Item 4. Information on the
    Company  Organizational Structure.                                                                                                                                                                      
|           
|            | 12.1 |               |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                
|           
|            | 12.2 |               |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                
|           
|            | 13.1 |               |  | Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.*                                                                                                                                                                                






|    |                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Filed herewith.                                                                                                                                            
|   
|**  | Incorporated by reference to the
    Form 20-F filed by
    E.ON AG with the Securities and Exchange Commission on
    March 19, 2003, file number 1-14688.
|   
|*** | Incorporated by reference to the
    Form 20-F filed by
    E.ON AG with the Securities and Exchange Commission on
    March 10, 2005, file number 1-14688.



|  |                                                                                                                                                                                                                                                                                                                                                                                          
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Confidential material appearing in this document has been
    omitted and filed separately with the Securities and Exchange
    Commission in accordance with the Securities Exchange Act of
    1934, as amended, and
    Rule 24b-2
    promulgated thereunder. Omitted information has been redacted
    and marked with an asterisk and appropriate legend to indicate
    redaction.

209



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E.ON AG AND SUBSIDIARIES




INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                        |                                                                                                                     |  |     |     | 
|------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------- |  | --- | --- | 
|Report of Independent Registered Public Accounting Firm |                                                                                                                     |  | F-1 |    
|Consolidated Financial Statements:                      |                                                                                                                     |  |     |    
|                                                        | Consolidated Statements of Income for the years ended
    December 31, 2005, 2004 and 2003                          |  |     | F-2 | 
|                                                        | Consolidated Balance Sheets at December 31, 2005 and 2004                                                           |  |     | F-3 | 
|                                                        | Consolidated Statements of Cash Flows for the years ended
    December 31, 2005, 2004 and 2003                      |  |     | F-4 | 
|                                                        | Consolidated Statements of Changes in Stockholders Equity
    for the years ended December 31, 2005, 2004 and 2003 |  |     | F-5 | 
|                                                        | Notes to the Consolidated Financial Statements                                                                      |  |     | F-6 | 

F-i



---



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(PAGE INTENTIONALLY LEFT BLANK)






---



##### Table of Contents



Report of Independent Registered Public Accounting Firm














|              |  |                                                                 |  |                                                       
|------------- |  | --------------------------------------------------------------- |  | ------------------------------------------------------
|Düsseldorf    |  | PricewaterhouseCoopers                                          |  |                                                       
|March 8, 2006 |  | Aktiengesellschaft                                              |  |                                                       
|              |  | Wirtschaftsprüfungsgesellschaft                                 |  |                                                       
|             
|              |  | /s/ Dr. Vogelpoth                                               |  | /s/ Laue                                              
|              |  |                                                                 |  |                                                       
|              |  | Dr. Vogelpoth
    Wirtschaftsprüfer
    (German Public Auditor) |  | Laue
    Wirtschaftsprüfer
    (German Public Auditor)

F-1



---



##### Table of Contents



E.ON AG AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF INCOME


(in millions, except for per share amounts)


|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |         |      |  |   |         |       |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ---- | ---- | ----------------------- | ----- | - | ------- | ----- | - | - | ------- | ----- | - | ---- | ------- | ---- |  | - | ------- | ----- | -
|                                                                                                                                                   |                                                            |      |      | Year Ended December 31, |      
|                                                                                                                                                   |                                                            |      |      |                         |      
|                                                                                                                                                   |                                                            | Note |      |                         | 2005* |   |         | 2005  |   |   | 2004    |       |   | 2003 |        
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Public utility sales                                                                                                                               |                                                            |      |      |                         |       | $ | 47,353  |       |   |  | 39,987  |       |   |     | 34,307  |      |  |  | 31,771  |      
|Gas sales                                                                                                                                          |                                                            |      |      |                         |       |   | 21,214  |       |   |   | 17,914  |       |   |      | 13,227  |      |  |   | 11,919  |      
|Other sales                                                                                                                                        |                                                            |      |      |                         |       |   | (1,779  | )     |   |   | (1,502  | )     |   |      | (792    | )    |  |   | 419     |      
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Sales                                                                                                                                              |                                                            |      | (31) |                         |       |   | 66,788  |       |   |   | 56,399  |       |   |      | 46,742  |      |  |   | 44,109  |      
|Electricity and petroleum tax                                                                                                                      |                                                            |      |      |                         |       |   | (5,382  | )     |   |   | (4,545  | )     |   |      | (4,358  | )    |  |   | (3,886  | )    
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Sales, net of electricity and petroleum tax                                                                                                        |                                                            |      |      |                         |       |   | 61,406  |       |   |   | 51,854  |       |   |      | 42,384  |      |  |   | 40,223  |      
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Cost of goods sold  Public utility                                                                                                                |                                                            |      |      |                         |       |   | (33,946 | )     |   |   | (28,666 | )     |   |      | (23,190 | )    |  |   | (22,658 | )    
|Cost of goods sold  Gas                                                                                                                           |                                                            |      |      |                         |       |   | (16,091 | )     |   |   | (13,588 | )     |   |      | (9,017  | )    |  |   | (8,060  | )    
|Cost of goods sold and services provided  Other                                                                                                   |                                                            |      |      |                         |       |   | 1,737   |       |   |   | 1,467   |       |   |      | 766     |      |  |   | (94     | )    
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Cost of goods sold and services provided                                                                                                           |                                                            |      |      |                         |       |   | (48,300 | )     |   |   | (40,787 | )     |   |      | (31,441 | )    |  |   | (30,812 | )    
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Gross profit on sales                                                                                                                              |                                                            |      |      |                         |       |   | 13,106  |       |   |   | 11,067  |       |   |      | 10,943  |      |  |   | 9,411   |      
|Selling expenses                                                                                                                                   |                                                            |      |      |                         |       |   | (4,562  | )     |   |   | (3,852  | )     |   |      | (4,235  | )    |  |   | (4,418  | )    
|General and administrative expenses                                                                                                                |                                                            |      |      |                         |       |   | (1,809  | )     |   |   | (1,528  | )     |   |      | (1,350  | )    |  |   | (1,248  | )    
|Other operating income (expenses), net                                                                                                             |                                                            |      | (5)  |                         |       |   | 2,007   |       |   |   | 1,695   |       |   |      | 1,361   |      |  |   | 1,658   |      
|Financial earnings                                                                                                                                 |                                                            |      | (6)  |                         |       |   | (206    | )     |   |   | (174    | )     |   |      | (364    | )    |  |   | (238    | )    
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Income/(Loss) from continuing operations before income taxes and
    minority interests                                                            |                                                            |      |      |                         |       |   | 8,536   |       |   |   | 7,208   |       |   |      | 6,355   |      |  |   | 5,165   |      
|Income taxes                                                                                                                                       |                                                            |      | (7)  |                         |       |   | (2,695  | )     |   |   | (2,276  | )     |   |      | (1,850  | )    |  |   | (1,145  | )    
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Income/(Loss) from continuing operations after income taxes                                                                                        |                                                            |      |      |                         |       |   | 5,841   |       |   |   | 4,932   |       |   |      | 4,505   |      |  |   | 4,020   |      
|Minority interests                                                                                                                                 |                                                            |      | (8)  |                         |       |   | (655    | )     |   |   | (553    | )     |   |      | (478    | )    |  |   | (445    | )    
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Income/(Loss) from continuing operations                                                                                                           |                                                            |      |      |                         |       |   | 5,186   |       |   |   | 4,379   |       |   |      | 4,027   |      |  |   | 3,575   |      
|Income/(Loss) from discontinued operations, net (less applicable
    income taxes of
    (50),
    97 and
    31, respectively)                 |                                                            |      | (4)  |                         |       |   | 3,594   |       |   |   | 3,035   |       |   |      | 312     |      |  |   | 1,512   |      
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Income before cumulative effect of changes in accounting
    principles                                                                            |                                                            |      |      |                         |       |   | 8,780   |       |   |   | 7,414   |       |   |      | 4,339   |      |  |   | 5,087   |      
|Cumulative effect of changes in accounting principles, net (less
    applicable income taxes of
    (3),
    0 and
    (261),
    respectively) |                                                            |      |      |                         |       |   | (9      | )     |   |   | (7      | )     |   |      |        |      |  |   | (440    | )    
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Net income                                                                                                                                         |                                                            |      |      |                         |       |   | 8,771   |       |   |   | 7,407   |       |   |      | 4,339   |      |  |   | 4,647   |      
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Basic earnings per share:                                                                                                                          |                                                            |      | (10) |                         |       |   |         |       |   |   |         |       |   |      |         |      |  |   |         |      
|                                                                                                                                                   | Income/(Loss) from continuing operations                   |      |      |                         |       |   |         | 7.87  |   |   |         | 6.64  |   |      |         | 6.13 |  |   |         | 5.47  |  
|                                                                                                                                                   | Income/(Loss) from discontinued operations, net            |      |      |                         |       |   |         | 5.45  |   |   |         | 4.61  |   |      |         | 0.48 |  |   |         | 2.31  |  
|                                                                                                                                                   | Cumulative effect of changes in accounting principles, net |      |      |                         |       |   |         | (0.01 | ) |   |         | (0.01 | ) |      |         |     |  |   |         | (0.67 | )
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|                                                                                                                                                   | Net income                                                 |      |      |                         |       |   |         | 13.31 |   |   |         | 11.24 |   |      |         | 6.61 |  |   |         | 7.11  |  
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|Diluted earnings per share:                                                                                                                        |                                                            |      | (10) |                         |       |   |         |       |   |   |         |       |   |      |         |      |  |   |         |      
|                                                                                                                                                   | Income/(Loss) from continuing operations                   |      |      |                         |       |   |         | 7.87  |   |   |         | 6.64  |   |      |         | 6.13 |  |   |         | 5.47  |  
|                                                                                                                                                   | Income/(Loss) from discontinued operations, net            |      |      |                         |       |   |         | 5.45  |   |   |         | 4.61  |   |      |         | 0.48 |  |   |         | 2.31  |  
|                                                                                                                                                   | Cumulative effect of changes in accounting principles, net |      |      |                         |       |   |         | (0.01 | ) |   |         | (0.01 | ) |      |         |     |  |   |         | (0.67 | )
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        
|                                                                                                                                                   | Net income                                                 |      |      |                         |       |   |         | 13.31 |   |   |         | 11.24 |   |      |         | 6.61 |  |   |         | 7.11  |  
|                                                                                                                                                   |                                                            |      |      |                         |       |   |         |       |   |   |         |       |   |      |        




|  |       
|- | ------
|* | Note 1



F-2



---



##### Table of Contents



E.ON AG AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS


(in millions)


|                                                                      |  |      |       |              |       |   |         |      |  |   |         |  |  |   |         | 
|--------------------------------------------------------------------- |  | ---- | ----- | ------------ | ----- | - | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                                                      |  |      |       | December 31, |      
|                                                                      |  |      |       |              |      
|                                                                      |  | Note |       |              | 2005* |   |         | 2005 |  |   | 2004    | 
|                                                                      |  |      |       |              |       |   |         |      |  |   |         | 
|ASSETS                                                                |  |      |       |              |       |   |         |      |  |   |         |  |  |   |         | 
|Goodwill                                                              |  |      |       |              |       | $ | 18,193  |      |  |  | 15,363  |  |  |  | 14,454  | 
|Intangible assets                                                     |  |      | (11a) |              |       |   | 4,885   |      |  |   | 4,125   |  |  |   | 3,788   | 
|Property, plant and equipment                                         |  |      | (11b) |              |       |   | 48,935  |      |  |   | 41,323  |  |  |   | 43,563  | 
|Financial assets                                                      |  |      | (11c) |              |       |   | 25,680  |      |  |   | 21,686  |  |  |   | 17,263  | 
|                                                                      |  |      |       |              |       |   |         |      |  |   |         | 
|Fixed assets                                                          |  |      |       |              |       |   | 97,693  |      |  |   | 82,497  |  |  |   | 79,068  | 
|                                                                      |  |      |       |              |       |   |         |      |  |   |         | 
|Inventories                                                           |  |      | (12)  |              |       |   | 2,910   |      |  |   | 2,457   |  |  |   | 2,647   | 
|Financial receivables and other financial assets                      |  |      | (13)  |              |       |   | 2,391   |      |  |   | 2,019   |  |  |   | 2,124   | 
|Operating receivables and other operating assets                      |  |      | (13)  |              |       |   | 25,287  |      |  |   | 21,354  |  |  |   | 15,759  | 
|Assets of disposal groups                                             |  |      | (4)   |              |       |   | 806     |      |  |   | 681     |  |  |   | 553     | 
|Investment in short-term securities                                   |  |      | (14)  |              |       |   | 12,678  |      |  |   | 10,706  |  |  |   | 7,840   | 
|Cash and cash equivalents                                             |  |      | (15)  |              |       |   | 5,226   |      |  |   | 4,413   |  |  |   | 4,176   | 
|                                                                      |  |      |       |              |       |   |         |      |  |   |         | 
|Non-fixed assets                                                      |  |      |       |              |       |   | 49,298  |      |  |   | 41,630  |  |  |   | 33,099  | 
|                                                                      |  |      |       |              |       |   |         |      |  |   |         | 
|Deferred tax assets                                                   |  |      | (7)   |              |       |   | 2,462   |      |  |   | 2,079   |  |  |   | 1,551   | 
|Prepaid expenses                                                      |  |      | (16)  |              |       |   | 422     |      |  |   | 356     |  |  |   | 344     | 
|                                                                      |  |      |       |              |       |   |         |      |  |   |         | 
|Total assets(thereof short-term 2005:
    32,648;
    2004: 25,839) |  |      |       |              |       |   | 149,875 |      |  |   | 126,562 |  |  |   | 114,062 | 
|                                                                      |  |      |       |              |       |   |         |      |  |   |         | 

|                                                                            |  |      |      |              |       |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------- |  | ---- | ---- | ------------ | ----- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                            |  |      |      | December 31, |      
|                                                                            |  |      |      |              |      
|                                                                            |  | Note |      |              | 2005* |   |         | 2005 |  |   | 2004    |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|STOCKHOLDERS EQUITY AND LIABILITIES                                        |  |      |      |              |       |   |         |      |  |   |         |   |  |   |         |  
|Capital stock                                                               |  |      | (17) |              |       | $ | 2,130   |      |  |  | 1,799   |   |  |  | 1,799   |  
|Additional paid-in capital                                                  |  |      | (18) |              |       |   | 13,913  |      |  |   | 11,749  |   |  |   | 11,746  |  
|Retained earnings                                                           |  |      | (19) |              |       |   | 30,625  |      |  |   | 25,861  |   |  |   | 20,003  |  
|Accumulated other comprehensive income                                      |  |      | (20) |              |       |   | 6,313   |      |  |   | 5,331   |   |  |   | 268     |  
|Treasury stock                                                              |  |      |      |              |       |   | (303    | )    |  |   | (256    | ) |  |   | (256    | )
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|Stockholders equity                                                        |  |      |      |              |       |   | 52,678  |      |  |   | 44,484  |   |  |   | 33,560  |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|Minority interests                                                          |  |      | (21) |              |       |   | 5,606   |      |  |   | 4,734   |   |  |   | 4,144   |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|Provisions for pensions                                                     |  |      | (22) |              |       |   | 10,326  |      |  |   | 8,720   |   |  |   | 8,589   |  
|Other provisions                                                            |  |      | (23) |              |       |   | 29,773  |      |  |   | 25,142  |   |  |   | 25,653  |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|Accrued liabilities                                                         |  |      |      |              |       |   | 40,099  |      |  |   | 33,862  |   |  |   | 34,242  |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|Financial liabilities                                                       |  |      | (24) |              |       |   | 17,008  |      |  |   | 14,362  |   |  |   | 20,301  |  
|Operating liabilities                                                       |  |      | (24) |              |       |   | 22,561  |      |  |   | 19,052  |   |  |   | 14,054  |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|Liabilities                                                                 |  |      |      |              |       |   | 39,569  |      |  |   | 33,414  |   |  |   | 34,355  |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|Liabilities of disposal groups                                              |  |      | (4)  |              |       |   | 984     |      |  |   | 831     |   |  |   | 54      |  
|Deferred tax liabilities                                                    |  |      | (7)  |              |       |   | 9,971   |      |  |   | 8,420   |   |  |   | 6,605   |  
|Deferred income                                                             |  |      | (16) |              |       |   | 968     |      |  |   | 817     |   |  |   | 1,102   |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|Total liabilities (thereof short-term 2005:
    25,093; 2004:
    23,734) |  |      |      |              |       |   | 97,197  |      |  |   | 82,078  |   |  |   | 80,502  |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  
|Total stockholders equity and liabilities                                  |  |      |      |              |       |   | 149,875 |      |  |   | 126,562 |   |  |   | 114,062 |  
|                                                                            |  |      |      |              |       |   |         |      |  |   |         |  




|  |       
|- | ------
|* | Note 1



F-3



---



##### Table of Contents



E.ON AG AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS


(in millions)


|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |        |      |   |        |        |        |  
|------------------------------------------------------------------------------------------ | ------------------------------------------------------------ | --------------------------------------------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ---- | - | ------ | ------ | ------ | -
|                                                                                           |                                                              | Year Ended December 31,                             |       
|                                                                                           |                                                              |                                                     |       
|                                                                                           |                                                              | 2005*                                               |        |        | 2005   |   |        | 2004   |        |   | 2003   |       
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Net income                                                                                 |                                                              | $                                                   | 8,771  |        |        |  | 7,407  |        |        |  | 4,339  |        |      |  | 4,647  |       
|Income applicable to minority interests                                                    |                                                              |                                                     | 655    |        |        |   | 553    |        |        |   | 478    |        |      |   | 445    |       
|Adjustments to reconcile net income to net cash provided by
    operating activities:      |                                                              |                                                     |        |        |        |   |        |        |        |   |        |        |      |   |        |       
|                                                                                           | Income from discontinued operations                          |                                                     |        | (3,594 | )      |   |        | (3,035 | )      |   |        | (312   | )    |   |        | (1,512 | )     
|                                                                                           | Depreciation, amortization, impairment                       |                                                     |        | 3,633  |        |   |        | 3,068  |        |   |        | 3,051  |      |   |        | 3,018  |       
|                                                                                           | Changes in provisions                                        |                                                     |        | (434   | )      |   |        | (367   | )      |   |        | (574   | )    |   |        | 1,868  |       
|                                                                                           | Changes in deferred taxes                                    |                                                     |        | 468    |        |   |        | 395    |        |   |        | 58     |      |   |        | (362   | )     
|                                                                                           | Other non-cash income and expenses                           |                                                     |        | (367   | )      |   |        | (310   | )      |   |        | 25     |      |   |        | (144   | )     
|                                                                                           | (Gain)/ Loss on disposal:                                    |                                                     |        |        |        |   |        |        |        |   |        |        |      |   |        |        |       
|                                                                                           |                                                              | Equity investments                                  |        |        | (52    | ) |        |        | (44    | ) |        |        | (397 | ) |        |        | (1,252 | )
|                                                                                           |                                                              | Other financial assets                              |        |        | (4     | ) |        |        | (3     | ) |        |        | (34  | ) |        |        | 1      |  
|                                                                                           |                                                              | Intangible assets and Property, plant and equipment |        |        | (43    | ) |        |        | (36    | ) |        |        | (31  | ) |        |        | (96    | )
|                                                                                           | Changes in non-fixed assets and other operating liabilities: |                                                     |        |        |        |   |        |        |        |   |        |        |      |   |        |        |       
|                                                                                           |                                                              | Inventories                                         |        |        | (335   | ) |        |        | (283   | ) |        |        | (285 | ) |        |        | 145    |  
|                                                                                           |                                                              | Trade receivables                                   |        |        | (1,782 | ) |        |        | (1,505 | ) |        |        | (210 | ) |        |        | 184    |  
|                                                                                           |                                                              | Other operating receivables                         |        |        | (4,560 | ) |        |        | (3,851 | ) |        |        | (2   | ) |        |        | 456    |  
|                                                                                           |                                                              | Trade payables                                      |        |        | 1,641  |   |        |        | 1,386  |   |        |        | (113 | ) |        |        | (642   | )
|                                                                                           |                                                              | Other operating liabilities                         |        |        | 3,820  |   |        |        | 3,226  |   |        |        | (153 | ) |        |        | (1,449 | )
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Cash provided by operating activities of continuing
    operations                         |                                                              |                                                     | 7,817  |        |        |   | 6,601  |        |        |   | 5,840  |        |      |   | 5,307  |       
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Proceeds from disposal of:                                                                 |                                                              |                                                     |        |        |        |   |        |        |        |   |        |        |      |   |        |       
|                                                                                           | Equity investments                                           |                                                     |        | 7,215  |        |   |        | 6,093  |        |   |        | 1,619  |      |   |        | 4,397  |       
|                                                                                           | Other financial assets                                       |                                                     |        | 361    |        |   |        | 305    |        |   |        | 719    |      |   |        | 991    |       
|                                                                                           | Intangible assets and Property, plant and equipment          |                                                     |        | 238    |        |   |        | 201    |        |   |        | 268    |      |   |        | 210    |       
|Purchase of:                                                                               |                                                              |                                                     |        |        |        |   |        |        |        |   |        |        |      |   |        |       
|                                                                                           | Equity investments                                           |                                                     |        | (1,166 | )      |   |        | (985   | )      |   |        | (2,203 | )    |   |        | (6,235 | )     
|                                                                                           | Other financial assets                                       |                                                     |        | (429   | )      |   |        | (362   | )      |   |        | (294   | )    |   |        | (240   | )     
|                                                                                           | Intangible assets and Property, plant and equipment          |                                                     |        | (3,541 | )      |   |        | (2,990 | )      |   |        | (2,612 | )    |   |        | (2,538 | )     
|Changes in securities (other than trading) (> 3 months)                                    |                                                              |                                                     | (567   | )      |        |   | (479   | )      |        |   | (385   | )      |      |   | 430    |       
|Changes in financial receivables                                                           |                                                              |                                                     | (1,639 | )      |        |   | (1,384 | )      |        |   | 2,506  |        |      |   | 2,757  |       
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Cash provided by (used for) investing activities of
    continuing operations              |                                                              |                                                     | 472    |        |        |   | 399    |        |        |   | (382   | )      |      |   | (228   | )     
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Payments received (made) from changes in capital including
    minority interests          |                                                              |                                                     | (31    | )      |        |   | (26    | )      |        |   | 3      |        |      |   | (6     | )     
|Payments received (made) for treasury stock, net                                           |                                                              |                                                     | (39    | )      |        |   | (33    | )      |        |   |       |        |      |   | 7      |       
|Payment of cash dividends to:                                                              |                                                              |                                                     |        |        |        |   |        |        |        |   |        |        |      |   |        |       
|                                                                                           | Stockholders of E.ON AG                                      |                                                     |        | (1,834 | )      |   |        | (1,549 | )      |   |        | (1,312 | )    |   |        | (1,142 | )     
|                                                                                           | Minority stockholders                                        |                                                     |        | (290   | )      |   |        | (245   | )      |   |        | (286   | )    |   |        | (477   | )     
|Payments for financial liabilities                                                         |                                                              |                                                     | 3,578  |        |        |   | 3,022  |        |        |   | 3,522  |        |      |   | 2,466  |       
|Repayments of financial liabilities                                                        |                                                              |                                                     | (9,040 | )      |        |   | (7,634 | )      |        |   | (6,693 | )      |      |   | (3,953 | )     
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Cash used for financing activities of continuing
    operations                            |                                                              |                                                     | (7,656 | )      |        |   | (6,465 | )      |        |   | (4,766 | )      |      |   | (3,105 | )     
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Net increase in cash and cash equivalents of continuing
    operations                     |                                                              |                                                     | 633    |        |        |   | 535    |        |        |   | 692    |        |      |   | 1,974  |       
|Cash flows from discontinued operations (Revised, see
    Note 27)                         |                                                              |                                                     |        |        |        |   |        |        |        |   |        |        |      |   |        |       
|Cash provided by operating activities of discontinued operations                           |                                                              |                                                     | 67     |        |        |   | 57     |        |        |   | 132    |        |      |   | 231    |       
|Cash provided by (used for) investing activities of discontinued
    operations            |                                                              |                                                     | (317   | )      |        |   | (268   | )      |        |   | (214   | )      |      |   | 250    |       
|Cash provided by (used for) financing activities of discontinued
    operations            |                                                              |                                                     | (194   | )      |        |   | (164   | )      |        |   | 305    |        |      |   | (440   | )     
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Cash provided by (used for) discontinued operations                                        |                                                              |                                                     | (444   | )      |        |   | (375   | )      |        |   | 223    |        |      |   | 41     |       
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Effect of foreign exchange rates on cash and cash equivalents of
    continuing operations |                                                              |                                                     | 92     |        |        |   | 77     |        |        |   | (60    | )      |      |   | (36    | )     
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Cash and cash equivalents at the beginning of the period                                   |                                                              |                                                     | 4,945  |        |        |   | 4,176  |        |        |   | 3,321  |        |      |   | 1,342  |       
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       
|Cash and cash equivalents                                                                  |                                                              |                                                     | 5,226  |        |        |   | 4,413  |        |        |   | 4,176  |        |      |   | 3,321  |       
|                                                                                           |                                                              |                                                     |        |        |        |   |        |        |        |   |        |       




|  |       
|- | ------
|* | Note 1



F-4



---



##### Table of Contents



E.ON AG AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY


(in millions of
)


|                           |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  |        |  
|-------------------------- |  | ------- | ----- | ---------- | ------- |  | ------ | -------------------------------------- | -------- |  | ----------- | --------- |  | ---------- | ------- | - | --------- |  | ----- | --------- |  |  | -------- | - |  | ----- | ---- | - |  |  | ---- | - |  |  | ------ | -
|                           |  |         |       |            |         |  |        | Accumulated other comprehensive income |          |  |             |           | 
|                           |  |         |       |            |         |  |        |                                        |          |  |             |           | 
|                           |  |         |       | Additional |         |  |        |                                        | Currency |  |             | Available |  |            | Minimum |   |           |  |       |           |  | 
|                           |  | Capital |       |            | paid-in |  |        | Retained                               |          |  | translation |           |  | for sale   |         |   | pension   |  |       | Cash flow |  |  | Treasury |   |  |      
|                           |  | stock   |       |            | capital |  |        | earnings                               |          |  | adjustments |           |  | securities |         |   | liability |  |       | hedges    |  |  | stock    |   |  | Total |     
|                           |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |     
|January 1, 2003            |  |         | 1,799 |            |         |  | 11,402 |                                        |          |  | 13,472      |           |  |            | (242    | ) |           |  | (3    | )         |  |  | (401     | ) |  |       | (115 | ) |  |  | (259 | ) |  |  | 25,653 |  
|Shares reacquired/sold     |  |         |       |            |         |  | 162    |                                        |          |  | (1          | )         |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  | 3    |   |  |  | 164    |  
|Dividends paid             |  |         |       |            |         |  |        |                                        |          |  | (1,142      | )         |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | (1,142 | )
|Net income                 |  |         |       |            |         |  |        |                                        |          |  | 4,647       |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | 4,647  |  
|Other comprehensive income |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            | (779    | ) |           |  | 1,187 |           |  |  | (91      | ) |  |       | 135  |   |  |  |      |   |  |  | 452    |  
|Total comprehensive income |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | 5,099  |  
|                           |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |     
|December 31, 2003          |  |         | 1,799 |            |         |  | 11,564 |                                        |          |  | 16,976      |           |  |            | (1,021  | ) |           |  | 1,184 |           |  |  | (492     | ) |  |       | 20   |   |  |  | (256 | ) |  |  | 29,774 |  
|                           |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |     
|Shares reacquired/sold     |  |         |       |            |         |  | 182    |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | 182    |  
|Dividends paid             |  |         |       |            |         |  |        |                                        |          |  | (1,312      | )         |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | (1,312 | )
|Net income                 |  |         |       |            |         |  |        |                                        |          |  | 4,339       |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | 4,339  |  
|Other comprehensive income |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            | 125     |   |           |  | 994   |           |  |  | (598     | ) |  |       | 56   |   |  |  |      |   |  |  | 577    |  
|Total comprehensive income |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | 4,916  |  
|                           |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |     
|December 31, 2004          |  |         | 1,799 |            |         |  | 11,746 |                                        |          |  | 20,003      |           |  |            | (896    | ) |           |  | 2,178 |           |  |  | (1,090   | ) |  |       | 76   |   |  |  | (256 | ) |  |  | 33,560 |  
|                           |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |     
|Shares reacquired/sold     |  |         |       |            |         |  | 3      |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | 3      |  
|Dividends paid             |  |         |       |            |         |  |        |                                        |          |  | (1,549      | )         |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | (1,549 | )
|Net income                 |  |         |       |            |         |  |        |                                        |          |  | 7,407       |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | 7,407  |  
|Other comprehensive income |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            | 620     |   |           |  | 4,698 |           |  |  | (312     | ) |  |       | 57   |   |  |  |      |   |  |  | 5,063  |  
|Total comprehensive income |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |      |   |  |  |      |   |  |  | 12,470 |  
|                           |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |     
|December 31, 2005          |  |         | 1,799 |            |         |  | 11,749 |                                        |          |  | 25,861      |           |  |            | (276    | ) |           |  | 6,876 |           |  |  | (1,402   | ) |  |       | 133  |   |  |  | (256 | ) |  |  | 44,484 |  
|                           |  |         |       |            |         |  |        |                                        |          |  |             |           |  |            |         |   |           |  |       |           |  |  |          |   |  |       |     



F-5



---



##### Table of Contents



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS




|    |                      
|--- | ---------------------
|(1) | Basis of Presentation







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Central Europe market unit, led by E.ON Energie AG
    (E.ON Energie), Munich, Germany, operates
    E.ONs integrated electricity business and the downstream
    gas business in Central Europe.                                                                                                                                                                                                                                                                          
|
| |  | Pan-European Gas is responsible for the upstream and midstream
    gas business. Moreover, this market unit holds predominantly
    minority interests in companies of the downstream gas business.
    This market unit is led by E.ON Ruhrgas AG (E.ON
    Ruhrgas), Essen, Germany.                                                                                                                                                                                          
|
| |  | The U.K. market unit encompasses the integrated energy business
    in the United Kingdom. This market unit is led by E.ON UK plc
    (E.ON UK), Coventry, U.K.                                                                                                                                                                                                                                                                                                                 
|
| |  | The Nordic market unit, which is led by E.ON Nordic AB
    (E.ON Nordic), Malmö, Sweden, focuses on the
    integrated energy business in Northern Europe. It operates
    through the integrated energy company E.ON Sverige AB
    (E.ON Sverige), Malmö, Sweden, (formerly:
    Sydkraft AB) and through E.ON Finland Oyj (E.ON
    Finland), Espoo, Finland, primarily in Sweden and Finland.
    For additional information about E.ON Finland, please see
    Note 33.
|
| |  | The U.S. Midwest market unit, led by E.ON U.S. LLC
    (E.ON U.S.), Louisville, Kentucky, U.S., (formerly:
    LG&E Energy LLC) is primarily active in the regulated energy
    market in the U.S. state of Kentucky.                                                                                                                                                                                                                                                           











F-6



---



##### Table of Contents








|    |                                           
|--- | ------------------------------------------
|(2) | Summary of Significant Accounting Policies

Principles of Consolidation






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Majority-owned subsidiaries in which E.ON directly or indirectly
    exercises control through a majority of the stockholders
    voting rights (affiliated companies) are fully
    consolidated. Furthermore, Financial Accounting Standards Board
    (FASB) Interpretation (FIN) No. 46
    (revised December 2003), Consolidation of Variable
    Interest Entities, an Interpretation of ARB No. 51
    (FIN 46R), requires E.ON to consolidate
    so-called variable interest entities in which it is the primary
    beneficiary for economic purposes, even if it does not have a
    controlling interest.
|
| |  | Majority-owned companies in which E.ON does not exercise
    management control due to restrictions in the control of assets
    and management (unconsolidated affiliates) are
    generally accounted for under the equity method. Companies in
    which E.ON has the ability to exercise significant influence in
    the investees operations (associated
    companies) are also accounted for under the equity method.
    These are mainly companies in which E.ON holds an interest of
    between 20 and 50 percent.                                                                                             
|
| |  | All other share investments are accounted for under the cost
    method or, if they are marketable, at fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              





Business Combinations




Foreign Currency Translation




F-7



---



##### Table of Contents







|                |  |          |     |                |      |  |              |      |  |  |      |  |  |      |      |  |      |  |      |  |  |  |      | 
|--------------- |  | -------- | --- | -------------- | ---- |  | ------------ | ---- |  |  | ---- |  |  | ---- | ---- |  | ---- |  | ---- |  |  |  | ---- | 
|                |  |          |     | 1, rate as of |      |  | 1, annual   |     
|                |  |          |     | December 31,   |      |  | average rate |     
|                |  |          |     |                |      |  |              |     
|                |  | ISO code |     |                | 2005 |  |              | 2004 |  |  | 2005 |  |  | 2004 |      |  | 2003 | 
|                |  |          |     |                |      |  |              |      |  |  |      |  |  |      |      |  |      | 
|British pound   |  |          | GBP |                |      |  | 0.69         |      |  |  | 0.71 |  |  |      | 0.68 |  |      |  | 0.68 |  |  |  | 0.69 | 
|Norwegian krone |  |          | NOK |                |      |  | 7.99         |      |  |  | 8.24 |  |  |      | 8.01 |  |      |  | 8.37 |  |  |  | 8.00 | 
|Swedish krona   |  |          | SEK |                |      |  | 9.39         |      |  |  | 9.02 |  |  |      | 9.28 |  |      |  | 9.12 |  |  |  | 9.12 | 
|U.S. dollar     |  |          | USD |                |      |  | 1.18         |      |  |  | 1.36 |  |  |      | 1.24 |  |      |  | 1.24 |  |  |  | 1.13 | 






|    |                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The countries within the European Monetary Union are Austria,
    Belgium, Finland, France, Germany, Greece, Ireland, Italy,
    Luxembourg, The Netherlands, Portugal and Spain.

Presentation of Sales and Cost of Goods Sold and Services
Provided








Revenue Recognition




Core Energy Business








F-8



---



##### Table of Contents



Other Activities




Electricity Tax




Petroleum Tax




Taxes other than Income Taxes


  


Cost of Goods Sold and Services Provided




Selling Expenses




Administrative Expenses




Accounting for Sales of Stock of Subsidiaries or Associated
Companies




F-9



---



##### Table of Contents



Advertising Costs


  


Research and Development Costs


  


Earnings per Share




Goodwill and Other Intangible Assets


Goodwill








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The first step is to compare each reporting units fair
    value with its carrying amount including goodwill. If a
    reporting units carrying amount exceeds its fair value,
    this indicates that its goodwill may be impaired and the second
    step is required.                                                                                                                                                                                                                                                                                                                                              
|
| |  | The second step is to compare the implied fair value of the
    reporting units goodwill with the carrying amount of its
    goodwill. The implied fair value is computed by allocating the
    reporting units fair value to all of its assets and
    liabilities in a manner that is similar to a purchase price
    allocation in a business combination in accordance with
    SFAS 141. The remainder after this allocation is the
    implied fair value of the reporting units goodwill. If
    this fair value of goodwill is less than its carrying value, the
    difference is recorded as an impairment.



Intangible Assets Not Subject to Amortization




Intangible Assets Subject to Amortization




F-10



---



##### Table of Contents











Property, Plant and Equipment




|                                                                              |                         |                |               
|----------------------------------------------------------------------------- | ----------------------- | -------------- | --------------
|Buildings                                                                     |                         | 10 to 50 years
|Power plants                                                                  |                         |               
|                                                                              | Conventional components |                | 10 to 60 years
|                                                                              | Nuclear components      |                | up to 25 years
|Hydro power plants and other facilities used to generate
    renewable energy |                         | 10 to 50 years
|Equipment, fixtures, furniture and office equipment                           |                         | 3 to 25 years 
|Technical equipment for storage, distribution and transmission                |                         | 15 to 65 years







Leasing




F-11



---



##### Table of Contents







Financial Assets


held-to held-to






Inventories




Receivables and Other Assets




Emission Rights




F-12



---



##### Table of Contents







Discontinued Operations and Assets Held for Sale












Investments in Short-Term Securities




Cash and Cash Equivalents




Stock-Based Compensation




F-13



---



##### Table of Contents





U.S. Regulatory Assets and Liabilities








Provisions for Pensions


03-4, 03-4),


Other Provisions and Liabilities








F-14



---



##### Table of Contents





      


    




Deferred Taxes








Derivative Instruments and Hedging Activities




F-15



---



##### Table of Contents



















Consolidated Statement of Cash Flows




F-16



---



##### Table of Contents





Segment Information




Use of Estimates




Reclassifications




New Accounting Pronouncements












F-17



---



##### Table of Contents





|    |                       
|--- | ----------------------
|(3) | Scope of Consolidation



|                                               |  |          |     |   |         |  |      |       |  |  |      |  
|---------------------------------------------- |  | -------- | --- | - | ------- |  | ---- | ----- |  |  | ---- | -
|                                               |  | Domestic |     |   | Foreign |  |      | Total | 
|                                               |  |          |     |   |         |  |      |       | 
|Consolidated companies as of December 31, 2004 |  |          | 197 |   |         |  | 469  |       |  |  | 666  |  
|Additions                                      |  |          | 8   |   |         |  | 49   |       |  |  | 57   |  
|Disposals/ Mergers                             |  |          | (77 | ) |         |  | (139 | )     |  |  | (216 | )
|                                               |  |          |     |   |         |  |      |       | 
|Consolidated companies as of December 31, 2005 |  |          | 128 |   |         |  | 379  |       |  |  | 507  |  
|                                               |  |          |     |   |         |  |      |       | 





       





  











|    |                                                                         
|--- | ------------------------------------------------------------------------
|(4) | Acquisitions, Disposals, Discontinued Operations and Disposal
    Groups



F-18



---



##### Table of Contents







Acquisitions in 2005


Central Europe




| |                         
| | ------------------------
| | Gorna Oryahovitza/ Varna

 




| |    
| | ---
| | ETE



  




| |    
| | ---
| | NRE

 




| |             
| | ------------
| | E.ON Moldova




Pan-European Gas


Distrigaz


 


F-19



---



##### Table of Contents






Caledonia


 


U.K.


Enfield





Holford





Disposals, Discontinued Operations and Disposal Groups in
2005:


Discontinued Operations in 2005





Pan-European Gas


Ruhrgas Industries


 


F-20



---



##### Table of Contents





|                                                                                 |  |      |      |   |      |  |        |      |  |  |       |  
|-------------------------------------------------------------------------------- |  | ---- | ---- | - | ---- |  | ------ | ---- |  |  | ----- | -
| in millions                                                                    |  | 2005 |      |   | 2004 |  |        | 2003 | 
|                                                                                 |  |      |      |   |      |  |        |      | 
|Sales                                                                            |  |      | 847  |   |      |  | 1,188  |      |  |  | 1,043 |  
|Gain on disposal, net                                                            |  |      | 606  |   |      |  |       |      |  |  |      |  
|Other income/(expenses), net                                                     |  |      | (803 | ) |      |  | (1,123 | )    |  |  | (991  | )
|                                                                                 |  |      |      |   |      |  |        |      | 
|Income from continuing operations before income taxes and
    minority interests |  |      | 650  |   |      |  | 65     |      |  |  | 52    |  
|Income taxes                                                                     |  |      | (21  | ) |      |  | (35    | )    |  |  | (16   | )
|Minority interests                                                               |  |      | (1   | ) |      |  | (1     | )    |  |  | (1    | )
|                                                                                 |  |      |      |   |      |  |        |      | 
|Income from discontinued operations                                              |  |      | 628  |   |      |  | 29     |      |  |  | 35    |  
|                                                                                 |  |      |      |   |      |  |        |      | 

U.S. Midwest


WKE


25-year






|                                                                                 |  |      |      |   |      |  |      |      |  |  |      |  
|-------------------------------------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
| in millions                                                                    |  | 2005 |      |   | 2004 |  |      | 2003 | 
|                                                                                 |  |      |      |   |      |  |      |      | 
|Sales                                                                            |  |      | 214  |   |      |  | 195  |      |  |  | 200  |  
|Gain on disposal, net                                                            |  |      |     |   |      |  |     |      |  |  |     |  
|Other income/(expenses), net                                                     |  |      | (466 | ) |      |  | (199 | )    |  |  | (199 | )
|                                                                                 |  |      |      |   |      |  |      |      | 
|Income from continuing operations before income taxes and
    minority interests |  |      | (252 | ) |      |  | (4   | )    |  |  | 1    |  
|Income taxes                                                                     |  |      | 90   |   |      |  | 2    |      |  |  |     |  
|                                                                                 |  |      |      |   |      |  |      |      | 
|Income from discontinued operations                                              |  |      | (162 | ) |      |  | (2   | )    |  |  | 1    |  
|                                                                                 |  |      |      |   |      |  |      |      | 



|                  |  |              |     | 
|----------------- |  | ------------ | --- | 
|                  |  | December 31, |    
| in millions     |  | 2005         |    
|                  |  |              |    
|Fixed assets      |  |              | 212 | 
|Non-fixed assets  |  |              | 469 | 
|                  |  |              |    
|Total assets      |  |              | 681 | 
|                  |  |              |    
|Total liabilities |  |              | 831 | 

F-21



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##### Table of Contents



Other Activities




| |        
| | -------
| | Viterra

 




|                                                                                 |  |      |       |   |      |  |      |      |  |  |       |  
|-------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ---- | ---- |  |  | ----- | -
| in millions                                                                    |  | 2005 |       |   | 2004 |  |      | 2003 | 
|                                                                                 |  |      |       |   |      |  |      |      | 
|Sales                                                                            |  |      | 453   |   |      |  | 978  |      |  |  | 1,075 |  
|Gain on disposal, net                                                            |  |      | 2,406 |   |      |  |     |      |  |  |      |  
|Other income/(expenses), net                                                     |  |      | (282  | ) |      |  | (595 | )    |  |  | (755  | )
|                                                                                 |  |      |       |   |      |  |      |      | 
|Income from continuing operations before income taxes and
    minority interests |  |      | 2,577 |   |      |  | 383  |      |  |  | 320   |  
|Income taxes                                                                     |  |      | (19   | ) |      |  | (64  | )    |  |  | 37    |  
|Minority interests                                                               |  |      |      |   |      |  | (25  | )    |  |  | (18   | )
|                                                                                 |  |      |       |   |      |  |      |      | 
|Income from discontinued operations                                              |  |      | 2,558 |   |      |  | 294  |      |  |  | 339   |  
|                                                                                 |  |      |       |   |      |  |      |      | 

Acquisitions in 2004:


Significant Acquisitions in 2004


U.K.


Midlands Electricity


    




|                              |  |                  |        |  
|----------------------------- |  | ---------------- | ------ | -
| in millions                 |  | January 16, 2004 |       
|                              |  |                  |       
|Goodwill                      |  |                  | 473    |  
|Intangible assets             |  |                  | 10     |  
|Property, plant and equipment |  |                  | 1,745  |  
|Financial assets              |  |                  | 34     |  
|Non-fixed assets              |  |                  | 197    |  
|Other assets                  |  |                  | 20     |  
|                              |  |                  |       
|Total assets                  |  |                  | 2,479  |  
|                              |  |                  |       
|Accrued liabilities           |  |                  | (178   | )
|Liabilities                   |  |                  | (1,911 | )
|Other liabilities             |  |                  | (335   | )
|                              |  |                  |       
|Total liabilities             |  |                  | (2,424 | )
|                              |  |                  |       
|Net assets                    |  |                  | 55     |  
|                              |  |                  |       

F-22



---



##### Table of Contents





|                                               |  |           |        |  |           |  |        | 
|---------------------------------------------- |  | --------- | ------ |  | --------- |  | ------ | 
|                                               |  | 2004      |        |  | 2003      | 
| in millions                                  |  | unaudited |        |  | unaudited | 
|                                               |  |           |        |  |           | 
|Net sales                                      |  |           | 42,408 |  |           |  | 42,116 | 
|Income before changes in accounting principles |  |           | 4,343  |  |           |  | 5,156  | 
|Net income                                     |  |           | 4,343  |  |           |  | 4,726  | 
|Earnings per share (in
    )                  |  |           | 6.61   |  |           |  | 7.23   | 



Other Acquisitions in 2004


Central Europe


JME/ JCE


 







E.ON Bayern


  




Pan-European Gas


Thüga




F-23



---



##### Table of Contents



 




Nordic


Graninge


 





Disposal Groups in 2004


Disposals, Discontinued Operations and Disposal Groups in
2004:


Nordic


Graninge









|                  |  |                   |     |  
|----------------- |  | ----------------- | --- | -
| in millions     |  | December 31, 2004 |    
|                  |  |                   |    
|Fixed assets      |  |                   | 553 |  
|Non-fixed assets  |  |                   |    |  
|                  |  |                   |    
|Total assets      |  |                   | 553 |  
|                  |  |                   |    
|Total liabilities |  |                   | (54 | )
|                  |  |                   |    
|Net assets        |  |                   | 499 |  
|                  |  |                   |    

F-24



---



##### Table of Contents



Acquisitions in 2003:


Significant Acquisitions in 2003


E.ON AG


E.ON Ruhrgas




out-of 







|                                                 |  |                  |        |  
|------------------------------------------------ |  | ---------------- | ------ | -
| in millions                                    |  | February 1, 2003 |       
|                                                 |  |                  |       
|Intangible assets                                |  |                  | 651    |  
|Property, plant and equipment                    |  |                  | 4,191  |  
|Financial assets                                 |  |                  | 4,843  |  
|Non-fixed assets                                 |  |                  | 6,042  |  
|Other assets                                     |  |                  | 200    |  
|                                                 |  |                  |       
|Total assets                                     |  |                  | 15,927 |  
|                                                 |  |                  |       
|Accrued liabilities                              |  |                  | (2,098 | )
|Liabilities                                      |  |                  | (4,702 | )
|Other liabilities (including minority interests) |  |                  | (1,854 | )
|                                                 |  |                  |       
|Total liabilities                                |  |                  | (8,654 | )
|                                                 |  |                  |       
|Net assets (excluding goodwill)                  |  |                  | 7,273  |  
|                                                 |  |                  |       

Disposals, Discontinued Operations and Disposal Groups in
2003:


Disposals in 2003


E.ON AG


Degussa


  




F-25



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##### Table of Contents



  


Bouygues Telecom


   




Central Europe/ Pan-European Gas






| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | Bayerngas GmbH (Bayerngas), Munich, Germany (held by
    E.ON Energie (22.0 percent) and E.ON Ruhrgas
    (22.0 percent))
|
| |  | Gelsenwasser AG (Gelsenwasser), Gelsenkirchen,
    Germany (E.ON Energie (80.5 percent))                                 
|
| |  | swb AG (swb), Bremen, Germany (E.ON Energie
    (22.0 percent) and E.ON Ruhrgas (10.4 percent))                          
|
| |  | Verbundnetz Gas AG (VNG), Leipzig, Germany (E.ON
    Energie (5.3 percent) and E.ON Ruhrgas (36.8 percent))              
|
| |  | EWE Aktiengesellschaft (EWE), Oldenburg, Germany
    (E.ON Energie (27.4 percent))                                       

Bayerngas


 


Gelsenwasser




swb





F-26



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##### Table of Contents






VNG/ EWE


 


 




Discontinued Operations in 2003




E.ON AG


VEBA Oel


     


F-27



---



##### Table of Contents





|                                                                                 |  |      |     |  
|-------------------------------------------------------------------------------- |  | ---- | --- | -
| in millions                                                                    |  | 2003 |    
|                                                                                 |  |      |    
|Sales                                                                            |  |      |    |  
|Gain (loss) on disposal, net                                                     |  |      | (35 | )
|Other income/(expenses), net                                                     |  |      |    |  
|                                                                                 |  |      |    
|Income from continuing operations before income taxes and
    minority interests |  |      | (35 | )
|Income taxes                                                                     |  |      | (2  | )
|Minority interests                                                               |  |      |    |  
|                                                                                 |  |      |    
|Income from discontinued operations                                              |  |      | (37 | )
|                                                                                 |  |      |    

MEMC





Central Europe


Gelsenwasser


 




|                                                                                 |  |      |      |  
|-------------------------------------------------------------------------------- |  | ---- | ---- | -
| in millions                                                                    |  | 2003 |     
|                                                                                 |  |      |     
|Sales                                                                            |  |      | 295  |  
|Gain on disposal, net                                                            |  |      | 418  |  
|Other income/(expenses), net                                                     |  |      | (201 | )
|                                                                                 |  |      |     
|Income from continuing operations before income taxes and
    minority interests |  |      | 512  |  
|Income taxes                                                                     |  |      | (24  | )
|Minority interests                                                               |  |      | (9   | )
|                                                                                 |  |      |     
|Income from discontinued operations                                              |  |      | 479  |  
|                                                                                 |  |      |     

U.S. Midwest


CRC-Evans


   


F-28



---



##### Table of Contents



Other Activities


Viterra Energy Services/ Viterra Contracting


    




|                                                                                 |  |      |      |  
|-------------------------------------------------------------------------------- |  | ---- | ---- | -
| in millions                                                                    |  | 2003 |     
|                                                                                 |  |      |     
|Sales                                                                            |  |      | 202  |  
|Gain on disposal, net                                                            |  |      | 641  |  
|Other income/(expenses), net                                                     |  |      | (145 | )
|                                                                                 |  |      |     
|Income from continuing operations before income taxes and
    minority interests |  |      | 698  |  
|Income taxes                                                                     |  |      | (17  | )
|Minority interests                                                               |  |      |     |  
|                                                                                 |  |      |     
|Income from discontinued operations                                              |  |      | 681  |  
|                                                                                 |  |      |     



|    |                                    
|--- | -----------------------------------
|(5) | Other Operating Income and Expenses



|                                                        |  |      |       |   |      |  |       |      |  |  |       |  
|------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
| in millions                                           |  | 2005 |       |   | 2004 |  |       | 2003 | 
|                                                        |  |      |       |   |      |  |       |      | 
|Gains from the disposal of business and/or fixed assets |  |      | 83    |   |      |  | 473   |      |  |  | 1,316 |  
|Gain on derivative instruments, net                     |  |      | 946   |   |      |  | 585   |      |  |  | 384   |  
|Exchange rate differences                               |  |      | 138   |   |      |  | (309  | )    |  |  | 39    |  
|SAB 51 Gain                                             |  |      | 31    |   |      |  |      |      |  |  |      |  
|Research and development costs                          |  |      | (24   | ) |      |  | (19   | )    |  |  | (36   | )
|Write-down of non-fixed assets                          |  |      | (38   | ) |      |  | (31   | )    |  |  | (209  | )
|Miscellaneous                                           |  |      | 559   |   |      |  | 662   |      |  |  | 164   |  
|                                                        |  |      |       |   |      |  |       |      | 
|Total                                                   |  |      | 1,695 |   |      |  | 1,361 |      |  |  | 1,658 |  
|                                                        |  |      |       |   |      |  |       |      | 



         


F-29



---



##### Table of Contents



  





        






|    |                   
|--- | ------------------
|(6) | Financial Earnings

|                                                                                                                                                                                                         |  |      |        |   |      |  |        |      |  |  |       |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- |  | ------ | ---- |  |  | ----- | -
| in millions                                                                                                                                                                                            |  | 2005 |        |   | 2004 |  |        | 2003 | 
|                                                                                                                                                                                                         |  |      |        |   |      |  |        |      | 
|Income from companies in which share investments are held;
    thereof from affiliated companies:
    33 (2004:
    32; 2003:
    25)                                                                 |  |      | 203    |   |      |  | 185    |      |  |  | 160   |  
|Income from profit- and loss-pooling agreements;
    thereof from affiliated companies:
    3 (2004:
    5; 2003:
    9)                                                                              |  |      | 3      |   |      |  | 5      |      |  |  | 18    |  
|Income from companies accounted for under the equity method;
    thereof from affiliated companies:
    3 (2004:
    4; 2003:
    16)                                                                 |  |      | 778    |   |      |  | 817    |      |  |  | 794   |  
|Losses from companies accounted for under the equity method;
    thereof from affiliated companies:
    (96) (2004:
    (54); 2003:
    (3))                                                          |  |      | (345   | ) |      |  | (168   | )    |  |  | (130  | )
|Losses from profit- and loss-pooling agreements;
    thereof from affiliated companies:
    (1) (2004:
    (8); 2003:
    (11))                                                                       |  |      | (3     | ) |      |  | (10    | )    |  |  | (18   | )
|Write-down of investments                                                                                                                                                                                |  |      | (29    | ) |      |  | (77    | )    |  |  | (50   | )
|                                                                                                                                                                                                         |  |      |        |   |      |  |        |      | 
|Income from share investments                                                                                                                                                                            |  |      | 607    |   |      |  | 752    |      |  |  | 774   |  
|                                                                                                                                                                                                         |  |      |        |   |      |  |        |      | 
|Income from other long-term securities                                                                                                                                                                   |  |      | 45     |   |      |  | 36     |      |  |  | 48    |  
|Income from long-term loans                                                                                                                                                                              |  |      | 31     |   |      |  | 43     |      |  |  | 52    |  
|Other interest and similar income;
    thereof from affiliated companies:
    6 (2004:
    8; 2003:
    0)                                                                                            |  |      | 971    |   |      |  | 536    |      |  |  | 644   |  
|Interest and similar expenses;
    thereof from affiliated companies:
    (8) (2004:
    (5); 2003:
    (12))
    thereof SFAS 143 accretion expense:
    (511) (2004:
    (499); 2003:
    (486)) |  |      | (1,783 | ) |      |  | (1,677 | )    |  |  | (1722 | )
|                                                                                                                                                                                                         |  |      |        |   |      |  |        |      | 
|Interest and similar expenses (net)                                                                                                                                                                      |  |      | (736   | ) |      |  | (1,062 | )    |  |  | (978  | )
|                                                                                                                                                                                                         |  |      |        |   |      |  |        |      | 
|Write-down of financial assets and long-term loans                                                                                                                                                       |  |      | (45    | ) |      |  | (54    | )    |  |  | (34   | )
|                                                                                                                                                                                                         |  |      |        |   |      |  |        |      | 
|Financial earnings                                                                                                                                                                                       |  |      | (174   | ) |      |  | (364   | )    |  |  | (238  | )
|                                                                                                                                                                                                         |  |      |        |   |      |  |        |      | 





F-30



---



##### Table of Contents



  





    


  


   


  




|    |             
|--- | ------------
|(7) | Income Taxes



|               |                               |      |       |       |      |  |       |      |   |  |       |     |  
|-------------- | ----------------------------- | ---- | ----- | ----- | ---- |  | ----- | ---- | - |  | ----- | --- | -
| in millions  |                               | 2005 |       |       | 2004 |  |       | 2003 |  
|               |                               |      |       |       |      |  |       |      |  
|Current taxes  |                               |      |       |       |      |  |       |      |   |  |       |    
|               | Domestic corporate income tax |      |       | 1,081 |      |  |       | 952  |   |  |       | 560 |  
|               | Domestic trade tax            |      |       | 416   |      |  |       | 446  |   |  |       | 407 |  
|               | Foreign income tax            |      |       | 381   |      |  |       | 395  |   |  |       | 283 |  
|               | Other                         |      |       |      |      |  |       | (1   | ) |  |       | 1   |  
|               |                               |      |       |       |      |  |       |      |  
|Total          |                               |      | 1,878 |       |      |  | 1,792 |      |   |  | 1,251 |    
|               |                               |      |       |       |      |  |       |      |  
|Deferred taxes |                               |      |       |       |      |  |       |      |   |  |       |    
|               | Domestic                      |      |       | (4    | )    |  |       | 92   |   |  |       | (28 | )
|               | Foreign                       |      |       | 402   |      |  |       | (34  | ) |  |       | (78 | )
|               |                               |      |       |       |      |  |       |      |  
|Total          |                               |      | 398   |       |      |  | 58    |      |   |  | (106  | )  
|               |                               |      |       |       |      |  |       |      |  
|Income taxes   |                               |      | 2,276 |       |      |  | 1,850 |      |   |  | 1,145 |    
|               |                               |      |       |       |      |  |       |      |  

F-31



---



##### Table of Contents



  


     


 


  





   


F-32



---



##### Table of Contents





|                                              |                   |        |       |      |         |  |      |        |   |  |         |      |   |        |      |      |         |  |       |      |   |  |      |      |  
|--------------------------------------------- | ----------------- | ------ | ----- | ---- | ------- |  | ---- | ------ | - |  | ------- | ---- | - | ------ | ---- | ---- | ------- |  | ----- | ---- | - |  | ---- | ---- | -
|                                              |                   | 2005   |       |      | 2005    |  |      | 2004   |   |  | 2004    |      |   | 2003   |      |      | 2003    | 
| in millions                                 |                   | Amount |       |      | Percent |  |      | Amount |   |  | Percent |      |   | Amount |      |      | Percent | 
|                                              |                   |        |       |      |         |  |      |        |   |  |         |      |   |        |      |      |         | 
|Corporate income tax                          |                   |        | 1,802 |      |         |  | 25.0 |        |   |  | 1,588   |      |   |        | 25.0 |      |         |  | 1,369 |      |   |  | 26.5 |     
|Domestic trade tax net of federal tax benefit |                   |        | 475   |      |         |  | 6.6  |        |   |  | 433     |      |   |        | 6.8  |      |         |  | 78    |      |   |  | 1.5  |     
|Foreign tax rate differentials                |                   |        | 165   |      |         |  | 2.3  |        |   |  | 164     |      |   |        | 2.6  |      |         |  | 70    |      |   |  | 1.4  |     
|Change in valuation allowances                |                   |        | 109   |      |         |  | 1.5  |        |   |  | (202    | )    |   |        | (3.2 | )    |         |  | 542   |      |   |  | 10.5 |     
|Changes in tax rate/tax law                   |                   |        | 4     |      |         |  | 0.1  |        |   |  | 142     |      |   |        | 2.2  |      |         |  | 60    |      |   |  | 1.2  |     
|Tax effects on                                |                   |        |       |      |         |  |      |        |   |  |         |      |   |        |      |      |         |  |       |      |   |  |      |     
|                                              | Tax-free income   |        |       | (218 | )       |  |      | (3.0   | ) |  |         | (343 | ) |        |      | (5.4 | )       |  |       | (409 | ) |  |      | (7.9 | )
|                                              | Equity accounting |        |       | (46  | )       |  |      | (0.7   | ) |  |         | (122 | ) |        |      | (1.9 | )       |  |       | (163 | ) |  |      | (3.2 | )
|Other                                         |                   |        | (15   | )    |         |  | (0.2 | )      |   |  | 190     |      |   |        | 3.0  |      |         |  | (402  | )    |   |  | (7.8 | )   
|                                              |                   |        |       |      |         |  |      |        |   |  |         |      |   |        |      |      |         | 
|Effective income taxes/ tax rate              |                   |        | 2,276 |      |         |  | 31.6 |        |   |  | 1,850   |      |   |        | 29.1 |      |         |  | 1,145 |      |   |  | 22.2 |     
|                                              |                   |        |       |      |         |  |      |        |   |  |         |      |   |        |      |      |         | 



|                                            |  |      |     |   |      |  |    |      |  |  |     |  
|------------------------------------------- |  | ---- | --- | - | ---- |  | -- | ---- |  |  | --- | -
| in millions                               |  | 2005 |     |   | 2004 |  |    | 2003 | 
|                                            |  |      |     |   |      |  |    |      | 
|Viterra                                     |  |      | 19  |   |      |  | 64 |      |  |  | (37 | )
|Viterra Energy Services/Viterra Contracting |  |      |    |   |      |  |   |      |  |  | 17  |  
|Ruhrgas Industries                          |  |      | 21  |   |      |  | 35 |      |  |  | 16  |  
|WKE                                         |  |      | (90 | ) |      |  | (2 | )    |  |  |    |  
|Veba Oel                                    |  |      |    |   |      |  |   |      |  |  | 2   |  
|MEMC                                        |  |      |    |   |      |  |   |      |  |  | 9   |  
|Gelsenwasser                                |  |      |    |   |      |  |   |      |  |  | 24  |  
|                                            |  |      |     |   |      |  |    |      | 
|Income taxes from discontinued operations   |  |      | (50 | ) |      |  | 97 |      |  |  | 31  |  
|                                            |  |      |     |   |      |  |    |      | 



|              |  |      |       |  |      |  |       |      |  |  |       | 
|------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
| in millions |  | 2005 |       |  | 2004 |  |       | 2003 | 
|              |  |      |       |  |      |  |       |      | 
|Domestic      |  |      | 3,526 |  |      |  | 3,553 |      |  |  | 3,033 | 
|Foreign       |  |      | 3,682 |  |      |  | 2,802 |      |  |  | 2,132 | 
|              |  |      |       |  |      |  |       |      | 
|Total         |  |      | 7,208 |  |      |  | 6,355 |      |  |  | 5,165 | 
|              |  |      |       |  |      |  |       |      | 

F-33



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##### Table of Contents





|                         |                                  |              |  |        |      |  |  |        |  
|------------------------ | -------------------------------- | ------------ |  | ------ | ---- |  |  | ------ | -
|                         |                                  | December 31, | 
|                         |                                  |              | 
| in millions            |                                  | 2005         |  |        | 2004 | 
|                         |                                  |              |  |        |      | 
|Deferred tax assets      |                                  |              |  |        |      |  |  |       
|                         | Intangible assets                |              |  | 41     |      |  |  | 167    |  
|                         | Property, plant and equipment    |              |  | 624    |      |  |  | 376    |  
|                         | Financial assets                 |              |  | 383    |      |  |  | 518    |  
|                         | Inventories                      |              |  | 7      |      |  |  | 14     |  
|                         | Receivables                      |              |  | 178    |      |  |  | 343    |  
|                         | Accrued liabilities              |              |  | 4,753  |      |  |  | 4,165  |  
|                         | Liabilities                      |              |  | 2,421  |      |  |  | 1,250  |  
|                         | Net operating loss carryforwards |              |  | 891    |      |  |  | 1,089  |  
|                         | Tax credits                      |              |  | 33     |      |  |  | 34     |  
|                         | Other                            |              |  | 269    |      |  |  | 440    |  
|                         |                                  |              |  |        |      | 
|                         | Subtotal                         |              |  | 9,600  |      |  |  | 8,396  |  
|                         |                                  |              |  |        |      | 
|                         | Valuation allowance              |              |  | (573   | )    |  |  | (509   | )
|                         |                                  |              |  |        |      | 
|                         | Total                            |              |  | 9,027  |      |  |  | 7,887  |  
|                         |                                  |              |  |        |      | 
|Deferred tax liabilities |                                  |              |  |        |      |  |  |       
|                         | Intangible assets                |              |  | (1,030 | )    |  |  | (700   | )
|                         | Property, plant and equipment    |              |  | (6,609 | )    |  |  | (6,155 | )
|                         | Financial assets                 |              |  | (2,312 | )    |  |  | (1,114 | )
|                         | Inventories                      |              |  | (94    | )    |  |  | (98    | )
|                         | Receivables                      |              |  | (2,401 | )    |  |  | (1,934 | )
|                         | Accrued liabilities              |              |  | (1,167 | )    |  |  | (1,086 | )
|                         | Liabilities                      |              |  | (911   | )    |  |  | (1,149 | )
|                         | Other                            |              |  | (844   | )    |  |  | (705   | )
|                         |                                  |              |  |        |      | 
|                         | Total                            |              |  | 15,368 |      |  |  | 12,941 |  
|                         |                                  |              |  |        |      | 
|                         | Net deferred tax liabilities     |              |  | (6,341 | )    |  |  | (5,054 | )
|                         |                                  |              |  |        |      | 

   




|                              |  |                   |        |         |                   |  |        |       |         |  |             |   |  |  |        |  
|----------------------------- |  | ----------------- | ------ | ------- | ----------------- |  | ------ | ----- | ------- |  | ----------- | - |  |  | ------ | -
|                              |  | December 31, 2005 |        |         | December 31, 2004 | 
|                              |  |                   |        |         |                   | 
|                              |  |                   |        | Thereof |                   |  |        |       | Thereof | 
| in millions                 |  | Total             |        |         | non-current       |  |        | Total |         |  | non-current |  
|                              |  |                   |        |         |                   |  |        |       |         |  |             |  
|Deferred tax assets           |  |                   | 2,652  |         |                   |  | 2,269  |       |         |  | 2,060       |   |  |  | 1,865  |  
|Valuation allowance           |  |                   | (573   | )       |                   |  | (563   | )     |         |  | (509        | ) |  |  | (506   | )
|                              |  |                   |        |         |                   |  |        |       |         |  |             |  
|Net deferred tax assets       |  |                   | 2,079  |         |                   |  | 1,706  |       |         |  | 1,551       |   |  |  | 1,359  |  
|                              |  |                   |        |         |                   |  |        |       |         |  |             |  
|Less deferred tax liabilities |  |                   | (8,420 | )       |                   |  | (7,929 | )     |         |  | (6,605      | ) |  |  | (5,779 | )
|                              |  |                   |        |         |                   |  |        |       |         |  |             |  
|Net deferred tax liabilities  |  |                   | (6,341 | )       |                   |  | (6,223 | )     |         |  | (5,054      | ) |  |  | (4,420 | )
|                              |  |                   |        |         |                   |  |        |       |         |  |             |  

  


F-34



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##### Table of Contents













|                                |  |              |       |  |      |  |       | 
|------------------------------- |  | ------------ | ----- |  | ---- |  | ----- | 
|                                |  | December 31, |      
|                                |  |              |      
| in millions                   |  | 2005         |       |  | 2004 | 
|                                |  |              |       |  |      | 
|Domestic tax loss carryforwards |  |              | 2,907 |  |      |  | 4,487 | 
|Foreign tax loss carryforwards  |  |              | 1,220 |  |      |  | 1,158 | 
|                                |  |              |       |  |      | 
|Total                           |  |              | 4,127 |  |      |  | 5,645 | 
|                                |  |              |       |  |      | 




   


   




|    |                                 
|--- | --------------------------------
|(8) | Minority Interests in Net Income

     


(9)     Personnel-Related
Information


Personnel Costs




|                                                                                                            |  |      |       |  |      |  |       |      |  |  |       | 
|----------------------------------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
| in millions                                                                                               |  | 2005 |       |  | 2004 |  |       | 2003 | 
|                                                                                                            |  |      |       |  |      |  |       |      | 
|Wages and salaries                                                                                          |  |      | 3,232 |  |      |  | 2,933 |      |  |  | 3,101 | 
|Social security contributions                                                                               |  |      | 553   |  |      |  | 504   |      |  |  | 536   | 
|Pension costs and other employee benefits; thereof pension
    costs: 744
    (2004: 734;
    2003: 647) |  |      | 794   |  |      |  | 755   |      |  |  | 748   | 
|                                                                                                            |  |      |       |  |      |  |       |      | 
|Total                                                                                                       |  |      | 4,579 |  |      |  | 4,192 |      |  |  | 4,385 | 
|                                                                                                            |  |      |       |  |      |  |       |      | 

     


F-35



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##### Table of Contents





Stock Appreciation Rights of E.ON AG






|                                                                                               |  |             |              |  |             |  |              |             |  |  |              |  |  |             |              |  |             |  |              |  |  |  |              | 
|---------------------------------------------------------------------------------------------- |  | ----------- | ------------ |  | ----------- |  | ------------ | ----------- |  |  | ------------ |  |  | ----------- | ------------ |  | ----------- |  | ------------ |  |  |  | ------------ | 
|                                                                                               |  | 7th tranche |              |  | 6th tranche |  |              | 5th tranche |  |  | 4th tranche  |  |  | 3rd tranche |              |  | 2nd tranche | 
|                                                                                               |  |             |              |  |             |  |              |             |  |  |              |  |  |             |              |  |             | 
|Date of issuance                                                                               |  |             | Jan. 3, 2005 |  |             |  | Jan. 2, 2004 |             |  |  | Jan. 2, 2003 |  |  |             | Jan. 2, 2002 |  |             |  | Jan. 2, 2001 |  |  |  | Jan. 3, 2000 | 
|Term                                                                                           |  |             | 7 years      |  |             |  | 7 years      |             |  |  | 7 years      |  |  |             | 7 years      |  |             |  | 7 years      |  |  |  | 7 years      | 
|Blackout period                                                                                |  |             | 2 years      |  |             |  | 2 years      |             |  |  | 2 years      |  |  |             | 2 years      |  |             |  | 2 years      |  |  |  | 2 years      | 
|Price at issuance
    (in )                                                                   |  |             | 65.35        |  |             |  | 49.05        |             |  |  | 42.11        |  |  |             | 54.95        |  |             |  | 62.95        |  |  |  | 48.35        | 
|Number of participants in year of issuance                                                     |  |             | 357          |  |             |  | 357          |             |  |  | 344          |  |  |             | 186          |  |             |  | 231          |  |  |  | 155          | 
|Number of SAR issued (in millions)                                                             |  |             | 2.9          |  |             |  | 2.7          |             |  |  | 2.6          |  |  |             | 1.7          |  |             |  | 1.8          |  |  |  | 1.5          | 
|Exercise hurdle (minimum percentage by which exercise price
    exceeds the price at issuance) |  |             | 10           |  |             |  | 10           |             |  |  | 10           |  |  |             | 10           |  |             |  | 20           |  |  |  | 20           | 
|Exercise hurdle (minimum exercise price
    in )                                              |  |             | 71.89        |  |             |  | 53.96        |             |  |  | 46.32        |  |  |             | 60.45        |  |             |  | 75.54        |  |  |  | 58.02        | 
|Intrinsic value as of December 31, 2005 (in
    )                                             |  |             | 22.04        |  |             |  | 38.34        |             |  |  | 45.28        |  |  |             | 32.44        |  |             |  | 24.44        |  |  |  | 39.04        | 
|Maximum exercise gain
    (in )                                                               |  |             | 65.35        |  |             |  | 49.05        |             |  |  |             |  |  |             |             |  |             |  |             |  |  |  |             | 
|Number of SAR outstanding as of December 31, 2005
    (in millions)                            |  |             | 2.9          |  |             |  | 2.4          |             |  |  | 0.6          |  |  |             | 0.2          |  |             |  | 0.1          |  |  |  | 0.1          | 
|Provision as of December 31, 2005
    ( in millions)                                          |  |             | 31.8         |  |             |  | 92.7         |             |  |  | 27.8         |  |  |             | 7.7          |  |             |  | 3.9          |  |  |  | 0.5          | 
|Exercise gains in 2005
    ( in millions)                                                     |  |             | 0.1          |  |             |  | 1.2          |             |  |  | 49.9         |  |  |             | 8.5          |  |             |  | 15.1         |  |  |  | 3.3          | 
|Expense in 2005
    ( in millions)                                                            |  |             | 31.9         |  |             |  | 70.2         |             |  |  | 15.4         |  |  |             | 6.4          |  |             |  | 13.6         |  |  |  | 0.2          | 












| |   |                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Between the date of issuance and exercise, the E.ON stock price
    must outperform the Dow Jones STOXX Utilities Index (Price EUR)
    on at least ten consecutive trading days.

F-36



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##### Table of Contents





| |   |                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The E.ON stock price on the exercise date must be at least
    10.0 percent (for the second and third tranches: at least
    20.0 percent) above the price at issuance.











  


F-37



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##### Table of Contents





|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             |  |           |   |  |  |           |  
|----------------------------------------- |  | ----------- | --------- |  | ----------- |  | --------- | ----------- |  |  | ----------- | - |  | ----------- | --------- | - | ----------- |  | --------- | - |  |  | --------- | -
|Number of Options                         |  | 7th tranche |           |  | 6th tranche |  |           | 5th tranche |  |  | 4th tranche |   |  | 3rd tranche |           |   | 2nd tranche | 
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|Outstanding as of January 1, 2002         |  |             |          |  |             |  |          |             |  |  |            |   |  |             |          |   |             |  | 1,822,620 |   |  |  | 1,345,800 |  
|Granted in 2002                           |  |             |          |  |             |  |          |             |  |  |            |   |  |             | 1,646,419 |   |             |  |          |   |  |  |          |  
|Exercised in 2002                         |  |             |          |  |             |  |          |             |  |  |            |   |  |             |          |   |             |  |          |   |  |  | 220,150   |  
|Cancelled in 2002                         |  |             |          |  |             |  |          |             |  |  |            |   |  |             |          |   |             |  |          |   |  |  |          |  
|Change in scope of consolidation          |  |             |          |  |             |  |          |             |  |  |            |   |  |             |          |   |             |  | (504,720  | ) |  |  | (301,000  | )
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|Outstanding as of December 31, 2002       |  |             |          |  |             |  |          |             |  |  |            |   |  |             | 1,646,419 |   |             |  | 1,317,900 |   |  |  | 824,650   |  
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|Granted in 2003                           |  |             |          |  |             |  |          |             |  |  | 2,549,188   |   |  |             | 15,000    |   |             |  |          |   |  |  |          |  
|Exercised in 2003                         |  |             |          |  |             |  |          |             |  |  | 9,902       |   |  |             |          |   |             |  |          |   |  |  |          |  
|Cancelled in 2003                         |  |             |          |  |             |  |          |             |  |  |            |   |  |             |          |   |             |  |          |   |  |  |          |  
|Change in scope of consolidation          |  |             |          |  |             |  |          |             |  |  |            |   |  |             | (46,000   | ) |             |  | (17,000   | ) |  |  | (26,800   | )
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|Outstanding as of December 31, 2003       |  |             |          |  |             |  |          |             |  |  | 2,539,286   |   |  |             | 1,615,419 |   |             |  | 1,300,900 |   |  |  | 797,850   |  
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|Granted in 2004                           |  |             |          |  |             |  | 2,653,847 |             |  |  | 12,107      |   |  |             |          |   |             |  |          |   |  |  |          |  
|Exercised in 2004                         |  |             |          |  |             |  | 6,666     |             |  |  | 49,000      |   |  |             | 805,533   |   |             |  |          |   |  |  | 605,350   |  
|Cancelled in 2004                         |  |             |          |  |             |  |          |             |  |  |            |   |  |             |          |   |             |  |          |   |  |  |          |  
|Change in scope of consolidation          |  |             |          |  |             |  |          |             |  |  |            |   |  |             |          |   |             |  |          |   |  |  |          |  
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|Outstanding as of December 31, 2004       |  |             |          |  |             |  | 2,647,181 |             |  |  | 2,502,393   |   |  |             | 809,886   |   |             |  | 1,300,900 |   |  |  | 192,500   |  
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|Granted in 2005                           |  |             | 2,904,949 |  |             |  | 17,297    |             |  |  |            |   |  |             |          |   |             |  |          |   |  |  |          |  
|Exercised in 2005                         |  |             | 7,521     |  |             |  | 55,983    |             |  |  | 1,860,682   |   |  |             | 503,477   |   |             |  | 983,650   |   |  |  | 161,000   |  
|Cancelled in 2005                         |  |             | 12,000    |  |             |  | 20,000    |             |  |  |            |   |  |             |          |   |             |  | 7,000     |   |  |  |          |  
|Change in scope of consolidation          |  |             |          |  |             |  | (170,500  | )           |  |  | (28,000     | ) |  |             | (67,500   | ) |             |  | (151,500  | ) |  |  | (19,000   | )
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|Outstanding as of December 31, 2005       |  |             | 2,885,428 |  |             |  | 2,417,995 |             |  |  | 613,711     |   |  |             | 238,909   |   |             |  | 158,750   |   |  |  | 12,500    |  
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|Outstanding as of December 31, 2005 (in%) |  |             | 99.3      |  |             |  | 90.5      |             |  |  | 24.0        |   |  |             | 14.4      |   |             |  | 8.7       |   |  |  | 0.9       |  
|                                          |  |             |           |  |             |  |           |             |  |  |             |   |  |             |           |   |             | 
|SAR exercisable at year end               |  |             |          |  |             |  |          |             |  |  | 613,711     |   |  |             | 238,909   |   |             |  | 158,750   |   |  |  | 12,500    |  



Employees




|                     |  |      |        |  |      |  |        | 
|-------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|                     |  | 2005 |        |  | 2004 | 
|                     |  |      |        |  |      | 
|Central Europe       |  |      | 42,835 |  |      |  | 37,509 | 
|Pan-European Gas     |  |      | 11,025 |  |      |  | 3,982  | 
|U.K.                 |  |      | 12,106 |  |      |  | 10,453 | 
|Nordic               |  |      | 5,766  |  |      |  | 5,908  | 
|U.S. Midwest         |  |      | 3,007  |  |      |  | 3,039  | 
|Corporate Center     |  |      | 434    |  |      |  | 418    | 
|                     |  |      |        |  |      | 
|Core energy business |  |      | 75,173 |  |      |  | 61,309 | 
|                     |  |      |        |  |      | 
|Other activities     |  |      |       |  |      |  |       | 
|                     |  |      |        |  |      | 
|Total                |  |      | 75,173 |  |      |  | 61,309 | 
|                     |  |      |        |  |      | 

F-38



---



##### Table of Contents



(10)     Earnings per Share




|                                                                                  |                                                                 |      |       |       |      |  |       |      |  |  |       |       |  
|--------------------------------------------------------------------------------- | --------------------------------------------------------------- | ---- | ----- | ----- | ---- |  | ----- | ---- |  |  | ----- | ----- | -
| in millions                                                                     |                                                                 | 2005 |       |       | 2004 |  |       | 2003 | 
|                                                                                  |                                                                 |      |       |       |      |  |       |      | 
|Income/(Loss) from continuing operations                                          |                                                                 |      | 4,379 |       |      |  | 4,027 |      |  |  | 3,575 |      
|Income/(Loss) from discontinued operations, net                                   |                                                                 |      | 3,035 |       |      |  | 312   |      |  |  | 1,512 |      
|Income/(Loss) from cumulative effect of changes in accounting
    principles, net |                                                                 |      | (7    | )     |      |  |      |      |  |  | (440  | )    
|                                                                                  |                                                                 |      |       |       |      |  |       |      | 
|Net income                                                                        |                                                                 |      | 7,407 |       |      |  | 4,339 |      |  |  | 4,647 |      
|                                                                                  |                                                                 |      |       |       |      |  |       |      | 
|Weighted-average number of shares outstanding (in millions)                       |                                                                 |      | 659   |       |      |  | 657   |      |  |  | 654   |      
|                                                                                  |                                                                 |      |       |       |      |  |       |      | 
|Earnings per share (in
    )                                                     |                                                                 |      |       |       |      |  |       |      |  |  |       |      
|                                                                                  | from continuing operations                                      |      |       | 6.64  |      |  |       | 6.13 |  |  |       | 5.47  |  
|                                                                                  | from discontinued operations, net                               |      |       | 4.61  |      |  |       | 0.48 |  |  |       | 2.31  |  
|                                                                                  | from cumulative effect of changes in accounting principles, net |      |       | (0.01 | )    |  |       |     |  |  |       | (0.67 | )
|                                                                                  |                                                                 |      |       |       |      |  |       |      | 
|                                                                                  | from net income                                                 |      |       | 11.24 |      |  |       | 6.61 |  |  |       | 7.11  |  
|                                                                                  |                                                                 |      |       |       |      |  |       |      | 



F-39



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##### Table of Contents



(11)     Fixed Assets




|                                                          |  |                                  |         |          |             |  |           |               |  |  |           |   |              |           |       |  |           |  |        |            |  |  |      |   |  |  |      |   |  |  |         | 
|--------------------------------------------------------- |  | -------------------------------- | ------- | -------- | ----------- |  | --------- | ------------- |  |  | --------- | - | ------------ | --------- | ----- |  | --------- |  | ------ | ---------- |  |  | ---- | - |  |  | ---- | - |  |  | ------- | 
|                                                          |  | Acquisition and Production Costs |        
|                                                          |  |                                  |        
|                                                          |  |                                  |         | Exchange |             |  | Change in |               |  | 
|                                                          |  | January 1,                       |         |          | rate        |  |           | scope of      |  |  |           |   | December 31, |          
| in millions                                             |  | 2005                             |         |          | differences |  |           | consolidation |  |  | Additions |   |              | Disposals |       |  | Transfers |  |        | Impairment |  |  | 2005 |  
|                                                          |  |                                  |         |          |             |  |           |               |  |  |           |   |              |           |       |  |           |  |        |            |  |  |      |  
|Goodwill                                                  |  |                                  | 14,758  |          |             |  | 613       |               |  |  | 356       |   |              |           | 43    |  |           |  | (82    | )          |  |  | (26  | ) |  |  |     |   |  |  | 15,662  | 
|Intangible assets                                         |  |                                  | 5,428   |          |             |  | 32        |               |  |  | 494       |   |              |           | 114   |  |           |  | (79    | )          |  |  | 67   |   |  |  |     |   |  |  | 6,056   | 
|Advance payments on intangible assets                     |  |                                  | 7       |          |             |  |          |               |  |  | 2         |   |              |           | 26    |  |           |  |       |            |  |  | (9   | ) |  |  |     |   |  |  | 26      | 
|                                                          |  |                                  |         |          |             |  |           |               |  |  |           |   |              |           |       |  |           |  |        |            |  |  |      |  
|Goodwill and intangible assets                            |  |                                  | 20,193  |          |             |  | 645       |               |  |  | 852       |   |              |           | 183   |  |           |  | (161   | )          |  |  | 32   |   |  |  |     |   |  |  | 21,744  | 
|                                                          |  |                                  |         |          |             |  |           |               |  |  |           |   |              |           |       |  |           |  |        |            |  |  |      |  
|Real estate, leasehold rights and buildings               |  |                                  | 18,653  |          |             |  | (35       | )             |  |  | (6,749    | ) |              |           | 95    |  |           |  | (395   | )          |  |  | 218  |   |  |  | (15  | ) |  |  | 11,772  | 
|Technical equipment, plant and machinery                  |  |                                  | 73,725  |          |             |  | 834       |               |  |  | 1,623     |   |              |           | 1,918 |  |           |  | (1,240 | )          |  |  | 540  |   |  |  | (9   | ) |  |  | 77,391  | 
|Other equipment, fixtures, furniture and office equipment |  |                                  | 3,222   |          |             |  | 71        |               |  |  | 146       |   |              |           | 209   |  |           |  | (241   | )          |  |  | 70   |   |  |  | (129 | ) |  |  | 3,348   | 
|Advance payments and construction in progress             |  |                                  | 1,348   |          |             |  | 31        |               |  |  | (5        | ) |              |           | 940   |  |           |  | (119   | )          |  |  | (854 | ) |  |  | (10  | ) |  |  | 1,331   | 
|                                                          |  |                                  |         |          |             |  |           |               |  |  |           |   |              |           |       |  |           |  |        |            |  |  |      |  
|Property, plant and equipment                             |  |                                  | 96,948  |          |             |  | 901       |               |  |  | (4,985    | ) |              |           | 3,162 |  |           |  | (1,995 | )          |  |  | (26  | ) |  |  | (163 | ) |  |  | 93,842  | 
|                                                          |  |                                  |         |          |             |  |           |               |  |  |           |   |              |           |       |  |           |  |        |            |  |  |      |  
|Shares in unconsolidated affiliates                       |  |                                  | 599     |          |             |  | (2        | )             |  |  | (157      | ) |              |           | 228   |  |           |  | (204   | )          |  |  | 226  |   |  |  | (14  | ) |  |  | 676     | 
|Shares in associated companies                            |  |                                  | 10,431  |          |             |  | 47        |               |  |  | (140      | ) |              |           | 330   |  |           |  | (561   | )          |  |  | 149  |   |  |  | (8   | ) |  |  | 10,248  | 
|Other share investments                                   |  |                                  | 2,560   |          |             |  | (2        | )             |  |  | (195      | ) |              |           | 149   |  |           |  | (120   | )          |  |  | (147 | ) |  |  | (15  | ) |  |  | 2,230   | 
|Long-term loans to unconsolidated affiliates              |  |                                  | 592     |          |             |  | (1        | )             |  |  | (52       | ) |              |           | 30    |  |           |  | (110   | )          |  |  | (208 | ) |  |  |     |   |  |  | 251     | 
|Loans to associated companies and other share investments |  |                                  | 315     |          |             |  | (8        | )             |  |  | (1        | ) |              |           | 74    |  |           |  | (50    | )          |  |  | (17  | ) |  |  | (1   | ) |  |  | 312     | 
|Other long-term loans                                     |  |                                  | 556     |          |             |  | (9        | )             |  |  | (2        | ) |              |           | 52    |  |           |  | (21    | )          |  |  | (5   | ) |  |  | (9   | ) |  |  | 562     | 
|Long-term securities                                      |  |                                  | 466     |          |             |  | 4         |               |  |  | (3        | ) |              |           | 362   |  |           |  | (274   | )          |  |  |     |   |  |  |     |   |  |  | 555     | 
|                                                          |  |                                  |         |          |             |  |           |               |  |  |           |   |              |           |       |  |           |  |        |            |  |  |      |  
|Financial assets                                          |  |                                  | 15,519  |          |             |  | 29        |               |  |  | (550      | ) |              |           | 1,225 |  |           |  | (1,340 | )          |  |  | (2   | ) |  |  | (47  | ) |  |  | 14,834  | 
|                                                          |  |                                  |         |          |             |  |           |               |  |  |           |   |              |           |       |  |           |  |        |            |  |  |      |  
|Total                                                     |  |                                  | 132,660 |          |             |  | 1,575     |               |  |  | (4,683    | ) |              |           | 4,570 |  |           |  | (3,496 | )          |  |  | 4    |   |  |  | (210 | ) |  |  | 130,420 | 
|                                                          |  |                                  |         |          |             |  |           |               |  |  |           |   |              |           |       |  |           |  |        |            |  |  |      |  

|                                                          |  |                          |        |          |             |  |           |               |  |  |           |            |     |           |       |              |           |  |        |             |  |  |      |   |  |  |        |   |  |  |        |  
|--------------------------------------------------------- |  | ------------------------ | ------ | -------- | ----------- |  | --------- | ------------- |  |  | --------- | ---------- | --- | --------- | ----- | ------------ | --------- |  | ------ | ----------- |  |  | ---- | - |  |  | ------ | - |  |  | ------ | -
|                                                          |  | Accumulated Depreciation |       
|                                                          |  |                          |       
|                                                          |  |                          |        | Exchange |             |  | Change in |               |  |  |           | Fair value |     |           |      
|                                                          |  | January 1,               |        |          | rate        |  |           | scope of      |  |  |           |            | OCI |           |       | December 31, |          
|                                                          |  | 2005                     |        |          | differences |  |           | consolidation |  |  | Additions |            |     | Disposals |       |              | Transfers |  |        | adjustments |  |  | 2005 |  
|                                                          |  |                          |        |          |             |  |           |               |  |  |           |            |     |           |       |              |           |  |        |             |  |  |      |  
|Goodwill                                                  |  |                          | 304    |          |             |  | (3        | )             |  |  | (2        | )          |     |           |      |              |           |  |       |             |  |  |     |   |  |  |       |   |  |  | 299    |  
|Intangible assets                                         |  |                          | 1,647  |          |             |  | 10        |               |  |  | (30       | )          |     |           | 366   |              |           |  | (52    | )           |  |  | 16   |   |  |  |       |   |  |  | 1,957  |  
|Advance payments on intangible assets                     |  |                          |       |          |             |  |          |               |  |  |          |            |     |           |      |              |           |  |       |             |  |  |     |   |  |  |       |   |  |  |       |  
|                                                          |  |                          |        |          |             |  |           |               |  |  |           |            |     |           |       |              |           |  |        |             |  |  |      |  
|Goodwill and intangible assets                            |  |                          | 1,951  |          |             |  | 7         |               |  |  | (32       | )          |     |           | 366   |              |           |  | (52    | )           |  |  | 16   |   |  |  |       |   |  |  | 2,256  |  
|                                                          |  |                          |        |          |             |  |           |               |  |  |           |            |     |           |       |              |           |  |        |             |  |  |      |  
|Real estate, leasehold rights and buildings               |  |                          | 6,713  |          |             |  | 29        |               |  |  | (2,583    | )          |     |           | 231   |              |           |  | (302   | )           |  |  | 38   |   |  |  |       |   |  |  | 4,126  |  
|Technical equipment, plant and machinery                  |  |                          | 44,433 |          |             |  | 318       |               |  |  | 387       |            |     |           | 2,012 |              |           |  | (1,067 | )           |  |  | (71  | ) |  |  |       |   |  |  | 46,012 |  
|Other equipment, fixtures, furniture and office equipment |  |                          | 2,216  |          |             |  | 43        |               |  |  | 69        |            |     |           | 249   |              |           |  | (230   | )           |  |  | 26   |   |  |  |       |   |  |  | 2,373  |  
|Advance payments and construction in progress             |  |                          | 23     |          |             |  |          |               |  |  |          |            |     |           |      |              |           |  |       |             |  |  | (15  | ) |  |  |       |   |  |  | 8      |  
|                                                          |  |                          |        |          |             |  |           |               |  |  |           |            |     |           |       |              |           |  |        |             |  |  |      |  
|Property, plant and equipment                             |  |                          | 53,385 |          |             |  | 390       |               |  |  | (2,127    | )          |     |           | 2,492 |              |           |  | (1,599 | )           |  |  | (22  | ) |  |  |       |   |  |  | 52,519 |  
|                                                          |  |                          |        |          |             |  |           |               |  |  |           |            |     |           |       |              |           |  |        |             |  |  |      |  
|Shares in unconsolidated affiliates                       |  |                          | 28     |          |             |  |          |               |  |  | (18       | )          |     |           |      |              |           |  | (1     | )           |  |  |     |   |  |  |       |   |  |  | 9      |  
|Shares in associated companies                            |  |                          | 495    |          |             |  | 1         |               |  |  | (4        | )          |     |           |      |              |           |  | (3     | )           |  |  |     |   |  |  | 5      |   |  |  | 494    |  
|Other share investments                                   |  |                          | (1,924 | )        |             |  |          |               |  |  | (12       | )          |     |           |      |              |           |  |       |             |  |  |     |   |  |  | (4,839 | ) |  |  | (6,775 | )
|Long-term loans to unconsolidated affiliates              |  |                          |       |          |             |  |          |               |  |  |          |            |     |           |      |              |           |  |       |             |  |  |     |   |  |  |       |   |  |  |       |  
|Loans to associated companies and other share investments |  |                          | 18     |          |             |  |          |               |  |  |          |            |     |           |      |              |           |  |       |             |  |  |     |   |  |  |       |   |  |  | 18     |  
|Other long-term loans                                     |  |                          | 7      |          |             |  |          |               |  |  |          |            |     |           |      |              |           |  |       |             |  |  |     |   |  |  |       |   |  |  | 7      |  
|Long-term securities                                      |  |                          | (368   | )        |             |  |          |               |  |  |          |            |     |           |      |              |           |  |       |             |  |  |     |   |  |  | (237   | ) |  |  | (605   | )
|                                                          |  |                          |        |          |             |  |           |               |  |  |           |            |     |           |       |              |           |  |        |             |  |  |      |  
|Financial assets                                          |  |                          | (1,744 | )        |             |  | 1         |               |  |  | (34       | )          |     |           |      |              |           |  | (4     | )           |  |  |     |   |  |  | (5,071 | ) |  |  | (6,852 | )
|                                                          |  |                          |        |          |             |  |           |               |  |  |           |            |     |           |       |              |           |  |        |             |  |  |      |  
|Total                                                     |  |                          | 53,592 |          |             |  | 398       |               |  |  | (2,193    | )          |     |           | 2,858 |              |           |  | (1,655 | )           |  |  | (6   | ) |  |  | (5,071 | ) |  |  | 47,923 |  
|                                                          |  |                          |        |          |             |  |           |               |  |  |           |            |     |           |       |              |           |  |        |             |  |  |      |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                          |  |                 |        |  |              |  |        | 
|--------------------------------------------------------- |  | --------------- | ------ |  | ------------ |  | ------ | 
|                                                          |  | Net book values |       
|                                                          |  |                 |       
|                                                          |  | December 31,    |        |  | December 31, | 
|                                                          |  | 2005            |        |  | 2004         | 
|                                                          |  |                 |        |  |              | 
|Goodwill                                                  |  |                 | 15,363 |  |              |  | 14,454 | 
|Intangible assets                                         |  |                 | 4,099  |  |              |  | 3,781  | 
|Advance payments on intangible assets                     |  |                 | 26     |  |              |  | 7      | 
|                                                          |  |                 |        |  |              | 
|Goodwill and intangible assets                            |  |                 | 19,488 |  |              |  | 18,242 | 
|                                                          |  |                 |        |  |              | 
|Real estate, leasehold rights and buildings               |  |                 | 7,646  |  |              |  | 11,940 | 
|Technical equipment, plant and machinery                  |  |                 | 31,379 |  |              |  | 29,292 | 
|Other equipment, fixtures, furniture and office equipment |  |                 | 975    |  |              |  | 1,006  | 
|Advance payments and construction in progress             |  |                 | 1,323  |  |              |  | 1,325  | 
|                                                          |  |                 |        |  |              | 
|Property, plant and equipment                             |  |                 | 41,323 |  |              |  | 43,563 | 
|                                                          |  |                 |        |  |              | 
|Shares in unconsolidated affiliates                       |  |                 | 667    |  |              |  | 571    | 
|Shares in associated companies                            |  |                 | 9,754  |  |              |  | 9,936  | 
|Other share investments                                   |  |                 | 9,005  |  |              |  | 4,484  | 
|Long-term loans to unconsolidated affiliates              |  |                 | 251    |  |              |  | 592    | 
|Loans to associated companies and other share investments |  |                 | 294    |  |              |  | 297    | 
|Other long-term loans                                     |  |                 | 555    |  |              |  | 549    | 
|Long-term securities                                      |  |                 | 1,160  |  |              |  | 834    | 
|                                                          |  |                 |        |  |              | 
|Financial assets                                          |  |                 | 21,686 |  |              |  | 17,263 | 
|                                                          |  |                 |        |  |              | 
|Total                                                     |  |                 | 82,497 |  |              |  | 79,068 | 
|                                                          |  |                 |        |  |              | 

F-40



---



##### Table of Contents



a) Goodwill and Other Intangible Assets


Goodwill




|                                   |  |         |       |      |          |  |       |      |  |  |        |      |  |         |           |   |        |        |       |          |       |  |            |   |  |       |        |   |  |  |     |   |  |  |        |  
|---------------------------------- |  | ------- | ----- | ---- | -------- |  | ----- | ---- |  |  | ------ | ---- |  | ------- | --------- | - | ------ | ------ | ----- | -------- | ----- |  | ---------- | - |  | ----- | ------ | - |  |  | --- | - |  |  | ------ | -
|                                   |  |         |       | Pan- |          |  |       |      |  |  |        |      |  |         | Core      |   |        |        |       |         
|                                   |  | Central |       |      | European |  |       |      |  |  |        | U.S. |  |         | Corporate |   |        | Energy |       |          | Other |  |            |  
| in millions                      |  | Europe  |       |      | Gas      |  |       | U.K. |  |  | Nordic |      |  | Midwest |           |   | Center |        |       | Business |       |  | Activities |   |  | Total |       
|                                   |  |         |       |      |          |  |       |      |  |  |        |      |  |         |           |   |        |        |       |          |       |  |            |   |  |       |       
|Book value as of January 1, 2004   |  |         | 2,178 |      |          |  | 3,755 |      |  |  | 4,348  |      |  |         | 297       |   |        |        | 3,367 |          |       |  |           |   |  |       | 13,945 |   |  |  | 10  |   |  |  | 13,955 |  
|Goodwill additions/disposals       |  |         | 282   |      |          |  | 167   |      |  |  | 473    |      |  |         | 71        |   |        |        |      |          |       |  | 1          |   |  |       | 994    |   |  |  |    |   |  |  | 994    |  
|Other changes (1)                  |  |         | (155  | )    |          |  | (2    | )    |  |  | (42    | )    |  |         | (9        | ) |        |        | (287  | )        |       |  |           |   |  |       | (495   | ) |  |  |    |   |  |  | (495   | )
|                                   |  |         |       |      |          |  |       |      |  |  |        |      |  |         |           |   |        |        |       |          |       |  |            |   |  |       |       
|Book value as of December 31, 2004 |  |         | 2,305 |      |          |  | 3,920 |      |  |  | 4,779  |      |  |         | 359       |   |        |        | 3,080 |          |       |  | 1          |   |  |       | 14,444 |   |  |  | 10  |   |  |  | 14,454 |  
|Goodwill additions/disposals       |  |         | 115   |      |          |  | 481   |      |  |  | 21     |      |  |         | 7         |   |        |        |      |          |       |  | (1         | ) |  |       | 623    |   |  |  |    |   |  |  | 623    |  
|Other changes (1)                  |  |         | (1    | )    |          |  | (332  | )    |  |  | 155    |      |  |         | 2         |   |        |        | 472   |          |       |  |           |   |  |       | 296    |   |  |  | (10 | ) |  |  | 286    |  
|                                   |  |         |       |      |          |  |       |      |  |  |        |      |  |         |           |   |        |        |       |          |       |  |            |   |  |       |       
|Book value as of December 31, 2005 |  |         | 2,419 |      |          |  | 4,069 |      |  |  | 4,955  |      |  |         | 368       |   |        |        | 3,552 |          |       |  |           |   |  |       | 15,363 |   |  |  |    |   |  |  | 15,363 |  
|                                   |  |         |       |      |          |  |       |      |  |  |        |      |  |         |           |   |        |        |       |          |       |  |            |   |  |       |       






|    |                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Other changes include transfers and exchange rate differences;
    the figures for 2005 also include reclassifications to
    discontinued operations (Pan-European Gas segment:
    (326) million;
    other activities:
    (10) million)



 


Other Intangible Assets




|                                              |                                                   |                   |       |       |              |  |       |          |  |  |       |       | 
|--------------------------------------------- | ------------------------------------------------- | ----------------- | ----- | ----- | ------------ |  | ----- | -------- |  |  | ----- | ----- | 
|                                              |                                                   | December 31, 2005 |      
|                                              |                                                   |                   |      
|                                              |                                                   | Acquisition       |       |       | Accumulated  |  |       | Net book | 
| in millions                                 |                                                   | costs             |       |       | Amortization |  |       | value    | 
|                                              |                                                   |                   |       |       |              |  |       |          | 
|Intangible assets subject to amortization     |                                                   |                   |       |       |              |  |       |          |  |  |       |      
|Marketing-related intangible assets           |                                                   |                   | 223   |       |              |  | 123   |          |  |  | 100   |      
|                                              | thereof brand names                               |                   |       | 223   |              |  |       | 123      |  |  |       | 100   | 
|Customer-related intangible assets            |                                                   |                   | 2,419 |       |              |  | 765   |          |  |  | 1,654 |      
|                                              | thereof customer lists and customer relationships |                   |       | 2,305 |              |  |       | 704      |  |  |       | 1,601 | 
|Contract-based intangible assets              |                                                   |                   | 1,674 |       |              |  | 593   |          |  |  | 1,081 |      
|                                              | thereof concessions                               |                   |       | 1,223 |              |  |       | 392      |  |  |       | 831   | 
|Technology-based intangible assets            |                                                   |                   | 662   |       |              |  | 476   |          |  |  | 186   |      
|                                              | thereof software                                  |                   |       | 563   |              |  |       | 408      |  |  |       | 155   | 
|Intangible assets not subject to amortization |                                                   |                   | 1,104 |       |              |  |      |          |  |  | 1,104 |      
|                                              | thereof easements                                 |                   |       | 818   |              |  |       |         |  |  |       | 818   | 
|                                              |                                                   |                   |       |       |              |  |       |          | 
|Total                                         |                                                   |                   | 6,082 |       |              |  | 1,957 |          |  |  | 4,125 |      
|                                              |                                                   |                   |       |       |              |  |       |          | 

F-41



---



##### Table of Contents





|                                              |                                                   |                   |     |                  |                     |  |    |    | 
|--------------------------------------------- | ------------------------------------------------- | ----------------- | --- | ---------------- | ------------------- |  | -- | -- | 
|                                              |                                                   |                   |     | Weighted average |                    
|                                              |                                                   | Acquisition costs |     |                  | amortization period | 
|                                              |                                                   | ( in millions)   |     |                  | (in years)          | 
|                                              |                                                   |                   |     |                  |                     | 
|Intangible assets subject to amortization     |                                                   |                   |     |                  |                     |  |    |   
|Marketing-related intangible assets           |                                                   |                   |    |                  |                     |  |    |   
|Customer-related intangible assets            |                                                   |                   | 144 |                  |                     |  | 27 |   
|                                              | thereof customer lists and customer relationships |                   |     | 141              |                     |  |    | 28 | 
|Contract-based intangible assets              |                                                   |                   | 160 |                  |                     |  | 22 |   
|                                              | thereof construction permits                      |                   |     | 140              |                     |  |    | 25 | 
|Technology-based intangible assets            |                                                   |                   | 88  |                  |                     |  | 3  |   
|                                              | thereof software                                  |                   |     | 85               |                     |  |    | 3  | 
|Intangible assets not subject to amortization |                                                   |                   | 253 |                  |                     |  |    |   
|                                              | thereof licenses for exploration and production   |                   |     | 251              |                     |  |    |    | 
|                                              |                                                   |                   |     |                  |                     | 
|Total                                         |                                                   |                   | 645 |                  |                     |  |    |   
|                                              |                                                   |                   |     |                  |                     | 

    




|              |  |  |       | 
|------------- |  |  | ----- | 
| in millions |  | 
|              |  | 
|2006          |  |  | 354   | 
|2007          |  |  | 326   | 
|2008          |  |  | 241   | 
|2009          |  |  | 198   | 
|2010          |  |  | 165   | 
|              |  |  |      
|Total         |  |  | 1,284 | 
|              |  |  |      



b) Property, Plant and Equipment


     


  


   


 


F-42



---



##### Table of Contents



Jointly Owned Power Plants






|                       |                                     |           |  |       |                  |        |  |                 |  |  |                 |       |  |  |  |   | 
|---------------------- | ----------------------------------- | --------- |  | ----- | ---------------- | ------ |  | --------------- |  |  | --------------- | ----- |  |  |  | - | 
|                       |                                     |           |  |       |                  | E.ONs |  |                 | 
|                       |                                     | E.ONs    |  |       | E.ONs           |        |  | accumulated     |  |  | E.ONs          |      
|                       |                                     | ownership |  |       | total            |        |  | depreciation &  |  |  | construction    |      
|                       |                                     | interest  |  |       | acquisition cost |        |  | amortization    |  |  | work in process |      
|Name of plants by type |                                     | in %      |  |       | ( in millions)  |        |  | ( in millions) |  |  | ( in millions) |      
|                       |                                     |           |  |       |                  |        |  |                 |  |  |                 |      
|Nuclear                |                                     |           |  |       |                  |        |  |                 |  |  |                 |       |  |  |  |  
|                       | Isar 2                              |           |  | 75.00 |                  |        |  | 1,991           |  |  |                 | 1,855 |  |  |  | 8 | 
|                       | Gundremmingen B                     |           |  | 25.00 |                  |        |  | 96              |  |  |                 | 81    |  |  |  |  | 
|                       | Gundremmingen C                     |           |  | 25.00 |                  |        |  | 108             |  |  |                 | 93    |  |  |  |  | 
|Lignite                |                                     |           |  |       |                  |        |  |                 |  |  |                 |       |  |  |  |  
|                       | Lippendorf S                        |           |  | 50.00 |                  |        |  | 532             |  |  |                 | 373   |  |  |  |  | 
|Hard Coal              |                                     |           |  |       |                  |        |  |                 |  |  |                 |       |  |  |  |  
|                       | Bexbach 1                           |           |  | 8.33  |                  |        |  | 64              |  |  |                 | 60    |  |  |  |  | 
|                       | Trimble County (U.S.)               |           |  | 75.00 |                  |        |  | 516             |  |  |                 | 187   |  |  |  | 8 | 
|                       | Rostock                             |           |  | 50.38 |                  |        |  | 317             |  |  |                 | 284   |  |  |  |  | 
|Hydroelectric/ Wind    |                                     |           |  |       |                  |        |  |                 |  |  |                 |       |  |  |  |  
|                       | Nymølle Havspark/ Rødsand (Denmark) |           |  | 20.00 |                  |        |  | 42              |  |  |                 | 4     |  |  |  |  | 
|                       | Nußdorf                             |           |  | 53.00 |                  |        |  | 55              |  |  |                 | 41    |  |  |  |  | 
|                       | Ering                               |           |  | 50.00 |                  |        |  | 31              |  |  |                 | 28    |  |  |  |  | 
|                       | Egglfing                            |           |  | 50.00 |                  |        |  | 47              |  |  |                 | 43    |  |  |  |  | 

c) Financial Assets


  




| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | Shares in Affiliated and Associated Companies Accounted for
    Under the Equity Method



|                                                                |  |      |        |   |             |  |        |      |  |  |             |   |  |      |        |  |             |  |        |   |  |  |        |  
|--------------------------------------------------------------- |  | ---- | ------ | - | ----------- |  | ------ | ---- |  |  | ----------- | - |  | ---- | ------ |  | ----------- |  | ------ | - |  |  | ------ | -
| in millions                                                   |  | 2005 |        |   | thereof RAG |  |        | 2004 |  |  | thereof RAG |   |  | 2003 |        |  | thereof RAG | 
|                                                                |  |      |        |   |             |  |        |      |  |  |             |   |  |      |        |  |             | 
|Sales                                                           |  |      | 59,533 |   |             |  | 21,670 |      |  |  | 55,790      |   |  |      | 18,240 |  |             |  | 51,096 |   |  |  | 12,791 |  
|Net income                                                      |  |      | 1,782  |   |             |  | 91     |      |  |  | 2,415       |   |  |      |       |  |             |  | 2,258  |   |  |  | 86     |  
|E.ONs share of net income                                      |  |      | 550    |   |             |  | 36     |      |  |  | 881         |   |  |      |       |  |             |  | 791    |   |  |  | 34     |  
|Other (1)                                                       |  |      | (117   | ) |             |  | (36    | )    |  |  | (232        | ) |  |      |       |  |             |  | (127   | ) |  |  | (49    | )
|                                                                |  |      |        |   |             |  |        |      |  |  |             |   |  |      |        |  |             | 
|Income from companies accounted for under the equity
    method |  |      | 433    |   |             |  |       |      |  |  | 649         |   |  |      |       |  |             |  | 664    |   |  |  | (15    | )
|                                                                |  |      |        |   |             |  |        |      |  |  |             |   |  |      |        |  |             | 






|    |                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Other primarily includes adjustments to conform with
    E.ON accounting policies, amortization of fair value adjustments
    due to purchase price allocations and intercompany eliminations.

F-43



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##### Table of Contents



  


|                                                                  |  |              |        |  |             |  |        |      |  |  |             |  |  |  |        |  
|----------------------------------------------------------------- |  | ------------ | ------ |  | ----------- |  | ------ | ---- |  |  | ----------- |  |  |  | ------ | -
|                                                                  |  | December 31, |       
|                                                                  |  |              |       
| in millions                                                     |  | 2005         |        |  | thereof RAG |  |        | 2004 |  |  | thereof RAG | 
|                                                                  |  |              |        |  |             |  |        |      |  |  |             | 
|Fixed assets                                                      |  |              | 47,547 |  |             |  | 16,841 |      |  |  | 48,318      |  |  |  | 17,714 |  
|Non-fixed assets and prepaid expenses                             |  |              | 32,165 |  |             |  | 11,679 |      |  |  | 30,713      |  |  |  | 11,973 |  
|Accrued liabilities                                               |  |              | 28,611 |  |             |  | 15,401 |      |  |  | 26,797      |  |  |  | 14,686 |  
|Liabilities and deferred income                                   |  |              | 30,307 |  |             |  | 9,833  |      |  |  | 29,561      |  |  |  | 9,785  |  
|Minority interests                                                |  |              | 2,152  |  |             |  | 1,831  |      |  |  | 3,085       |  |  |  | 2,889  |  
|                                                                  |  |              |        |  |             |  |        |      |  |  |             | 
|Net assets                                                        |  |              | 18,642 |  |             |  | 1,455  |      |  |  | 19,588      |  |  |  | 2,327  |  
|                                                                  |  |              |        |  |             |  |        |      |  |  |             | 
|E.ONs share in equity                                            |  |              | 6,788  |  |             |  | 570    |      |  |  | 7,433       |  |  |  | 912    |  
|Other (1)                                                         |  |              | 2,901  |  |             |  | (570   | )    |  |  | 2,398       |  |  |  | (912   | )
|                                                                  |  |              |        |  |             |  |        |      |  |  |             | 
|Investment in companies accounted for under the equity
    method |  |              | 9,689  |  |             |  |       |      |  |  | 9,831       |  |  |  |       |  
|                                                                  |  |              |        |  |             |  |        |      |  |  |             | 






|    |                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Other primarily includes adjustments to conform with
    E.ON accounting policies, (goodwill, fair value adjustments due
    to purchase price allocations), intercompany eliminations and
    impairments.

   


 


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Other Share Investments and Available-for-Sale Securities




|                          |  |                   |       |       |                   |  |        |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            |  |  |  |   |  |  |  |       | 
|------------------------- |  | ----------------- | ----- | ----- | ----------------- |  | ------ | ---------- |  |  | ---------- | ----- |  | --------- | ----- |  | ----- |  | ----- | ---------- |  |  | ---------- |  |  |  | - |  |  |  | ----- | 
|                          |  | December 31, 2005 |       |       | December 31, 2004 | 
|                          |  |                   |       |       |                   | 
|                          |  |                   |       | Gross |                   |  | Gross  |            |  |  |            | Gross |  |           | Gross | 
|                          |  | Amortized         |       |       | Fair              |  |        | unrealized |  |  | unrealized |       |  | Amortized |       |  | Fair  |  |       | unrealized |  |  | unrealized | 
| in millions             |  | cost              |       |       | value             |  |        | loss       |  |  | gain       |       |  | cost      |       |  | value |  |       | loss       |  |  | gain       | 
|                          |  |                   |       |       |                   |  |        |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            | 
|Fixed-term securities     |  |                   |       |       |                   |  |        |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            |  |  |  |   |  |  |  |       | 
|Less than 1 year          |  |                   | 10    |       |                   |  | 10     |            |  |  |           |       |  |           |      |  |       |  | 109   |            |  |  | 109        |  |  |  |  |  |  |  |      | 
|Between 1 and 5 years     |  |                   | 54    |       |                   |  | 54     |            |  |  |           |       |  |           |      |  |       |  | 14    |            |  |  | 14         |  |  |  |  |  |  |  |      | 
|More than 5 years         |  |                   | 58    |       |                   |  | 68     |            |  |  |           |       |  |           | 10    |  |       |  | 97    |            |  |  | 101        |  |  |  |  |  |  |  | 4     | 
|                          |  |                   |       |       |                   |  |        |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            | 
|Subtotal                  |  |                   | 122   |       |                   |  | 132    |            |  |  |           |       |  |           | 10    |  |       |  | 220   |            |  |  | 224        |  |  |  |  |  |  |  | 4     | 
|                          |  |                   |       |       |                   |  |        |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            | 
|Non-fixed-term securities |  |                   | 2,624 |       |                   |  | 10,033 |            |  |  | 1          |       |  |           | 7,410 |  |       |  | 2,755 |            |  |  | 5,094      |  |  |  | 1 |  |  |  | 2,340 | 
|                          |  |                   |       |       |                   |  |        |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            | 
|Total                     |  |                   | 2,746 |       |                   |  | 10,165 |            |  |  | 1          |       |  |           | 7,420 |  |       |  | 2,975 |            |  |  | 5,318      |  |  |  | 1 |  |  |  | 2,344 | 
|                          |  |                   |       |       |                   |  |        |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            | 

  


     


F-44



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##### Table of Contents



 


 




| |                
| | ---------------
| | Long-Term Loans



|                                                          |  |                   |       |               |                   |  |          |         |  |  |               |               |  |        |          |  |         |  |      |  |  |  |      | 
|--------------------------------------------------------- |  | ----------------- | ----- | ------------- | ----------------- |  | -------- | ------- |  |  | ------------- | ------------- |  | ------ | -------- |  | ------- |  | ---- |  |  |  | ---- | 
|                                                          |  | December 31, 2005 |       |               | December 31, 2004 | 
|                                                          |  |                   |       |               |                   | 
|                                                          |  |                   |       | Average       |                   |  |          |         |  |  | Average       |               |  |       
|                                                          |  |                   |       | interest rate |                   |  | Maturity |         |  |  |               | interest rate |  |        | Maturity | 
|                                                          |  |  in millions     |       |               | (in %)            |  |          | through |  |  |  in millions |               |  | (in %) |          |  | through | 
|                                                          |  |                   |       |               |                   |  |          |         |  |  |               |               |  |        |          |  |         | 
|Loans to affiliated companies                             |  |                   | 251   |               |                   |  | 4.24     |         |  |  | 2022          |               |  |        | 592      |  |         |  | 4.34 |  |  |  | 2025 | 
|Loans to associated companies and other share investments |  |                   | 294   |               |                   |  | 3.68     |         |  |  | 2024          |               |  |        | 297      |  |         |  | 3.18 |  |  |  | 2024 | 
|Other long-term loans                                     |  |                   | 555   |               |                   |  | 2.08     |         |  |  | 2021          |               |  |        | 549      |  |         |  | 2.42 |  |  |  | 2023 | 
|                                                          |  |                   |       |               |                   |  |          |         |  |  |               |               |  |        |          |  |         | 
|Total                                                     |  |                   | 1,100 |               |                   |  |          |         |  |  |               |               |  |        | 1,438    |  |         |  |      |  |  |  |      | 
|                                                          |  |                   |       |               |                   |  |          |         |  |  |               |               |  |        |          |  |         | 






|     |            
|---- | -----------
|(12) | Inventories



|                                      |                      |              |       |       |      |  |       |       | 
|------------------------------------- | -------------------- | ------------ | ----- | ----- | ---- |  | ----- | ----- | 
|                                      |                      | December 31, |      
|                                      |                      |              |      
| in millions                         |                      | 2005         |       |       | 2004 | 
|                                      |                      |              |       |       |      | 
|Raw materials and supplies by segment |                      |              |       |       |      |  |       |      
|                                      | Central Europe       |              |       | 904   |      |  |       | 838   | 
|                                      | Pan-European Gas     |              |       | 28    |      |  |       | 104   | 
|                                      | U.K.                 |              |       | 326   |      |  |       | 221   | 
|                                      | Nordic               |              |       | 223   |      |  |       | 213   | 
|                                      | U.S. Midwest         |              |       | 237   |      |  |       | 182   | 
|                                      | Corporate Center     |              |       |      |      |  |       |      | 
|                                      |                      |              |       |       |      | 
|                                      | Core energy business |              |       | 1,718 |      |  |       | 1,558 | 
|                                      | Other activities     |              |       |      |      |  |       | 69    | 
|                                      |                      |              |       |       |      | 
|Total                                 |                      |              | 1,718 |       |      |  | 1,627 |      
|                                      |                      |              |       |       |      | 
|Work in progress                      |                      |              | 58    |       |      |  | 320   |      
|Finished products                     |                      |              | 10    |       |      |  | 98    |      
|Goods purchased for resale            |                      |              | 671   |       |      |  | 602   |      
|                                      |                      |              |       |       |      | 
|Inventories                           |                      |              | 2,457 |       |      |  | 2,647 |      
|                                      |                      |              |       |       |      | 

 


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F-45



---



##### Table of Contents





|     |                             
|---- | ----------------------------
|(13) | Receivables and Other Assets



|                                                                                  |  |                   |        |  |                   |  |       |            |  |  |              |  |  |  |       | 
|--------------------------------------------------------------------------------- |  | ----------------- | ------ |  | ----------------- |  | ----- | ---------- |  |  | ------------ |  |  |  | ----- | 
|                                                                                  |  | December 31, 2005 |        |  | December 31, 2004 | 
|                                                                                  |  |                   |        |  |                   | 
|                                                                                  |  | With a            |        |  | With a            |  |       | With a     |  |  | With a       | 
|                                                                                  |  | remaining         |        |  | remaining         |  |       | remaining  |  |  | remaining    | 
|                                                                                  |  | term up to        |        |  | term of more      |  |       | term up to |  |  | term of more | 
| in millions                                                                     |  | 1 year            |        |  | than 1 year       |  |       | 1 year     |  |  | than 1 year  | 
|                                                                                  |  |                   |        |  |                   |  |       |            |  |  |              | 
|Financial receivables from affiliated companies                                   |  |                   | 115    |  |                   |  |      |            |  |  | 85           |  |  |  | 19    | 
|Financial receivables from associated companies                                   |  |                   | 87     |  |                   |  | 158   |            |  |  | 84           |  |  |  | 3     | 
|Other financial assets                                                            |  |                   | 858    |  |                   |  | 801   |            |  |  | 1,145        |  |  |  | 788   | 
|                                                                                  |  |                   |        |  |                   |  |       |            |  |  |              | 
|Financial receivables and other financial assets                                  |  |                   | 1,060  |  |                   |  | 959   |            |  |  | 1,314        |  |  |  | 810   | 
|                                                                                  |  |                   |        |  |                   |  |       |            |  |  |              | 
|Trade receivables                                                                 |  |                   | 8,179  |  |                   |  | 90    |            |  |  | 6,462        |  |  |  | 72    | 
|Operating receivables from affiliated companies                                   |  |                   | 62     |  |                   |  |      |            |  |  | 63           |  |  |  |      | 
|Operating receivables from associated companies and other share
    investments   |  |                   | 748    |  |                   |  |      |            |  |  | 747          |  |  |  | 24    | 
|Reinsurance claim due from the mutual insurance fund
    Versorgungskasse Energie |  |                   | 80     |  |                   |  | 1,495 |            |  |  | 44           |  |  |  | 974   | 
|U.S. regulatory assets                                                            |  |                   | 52     |  |                   |  | 69    |            |  |  | 58           |  |  |  | 55    | 
|Other operating assets                                                            |  |                   | 8,832  |  |                   |  | 1,747 |            |  |  | 6,334        |  |  |  | 926   | 
|                                                                                  |  |                   |        |  |                   |  |       |            |  |  |              | 
|Operating receivables and other operating assets                                  |  |                   | 17,953 |  |                   |  | 3,401 |            |  |  | 13,708       |  |  |  | 2,051 | 
|                                                                                  |  |                   |        |  |                   |  |       |            |  |  |              | 
|Receivables and other assets                                                      |  |                   | 19,013 |  |                   |  | 4,360 |            |  |  | 15,022       |  |  |  | 2,861 | 
|                                                                                  |  |                   |        |  |                   |  |       |            |  |  |              | 

     







         


F-46



---



##### Table of Contents



Valuation Allowances for Doubtful Accounts




|                             |  |      |     |  |      |  |     |  
|---------------------------- |  | ---- | --- |  | ---- |  | --- | -
| in millions                |  | 2005 |     |  | 2004 | 
|                             |  |      |     |  |      | 
|Balance as of January 1      |  |      | 431 |  |      |  | 463 |  
|Changes affecting income     |  |      | 34  |  |      |  | (13 | )
|Changes not affecting income |  |      | 58  |  |      |  | (19 | )
|                             |  |      |     |  |      | 
|Balance as of December 31    |  |      | 523 |  |      |  | 431 |  
|                             |  |      |     |  |      | 





|     |                                     
|---- | ------------------------------------
|(14) | Investments in Short-Term Securities



|                                                                                     |  |              |        |  |      |  |       | 
|------------------------------------------------------------------------------------ |  | ------------ | ------ |  | ---- |  | ----- | 
|                                                                                     |  | December 31, |       
|                                                                                     |  |              |       
| in millions                                                                        |  | 2005         |        |  | 2004 | 
|                                                                                     |  |              |        |  |      | 
|Deposits at banking institutions with an original maturity
    greater than 3 months |  |              | 1,488  |  |      |  | 89    | 
|Securities with an original maturity greater than 3 months                           |  |              | 9,218  |  |      |  | 7,751 | 
|                                                                                     |  |              |        |  |      | 
|Investments in short-term securities                                                 |  |              | 10,706 |  |      |  | 7,840 | 
|                                                                                     |  |              |        |  |      | 





|                          |  |                   |       |       |                   |  |       |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            |  |  |  |    |  |  |  |     | 
|------------------------- |  | ----------------- | ----- | ----- | ----------------- |  | ----- | ---------- |  |  | ---------- | ----- |  | --------- | ----- |  | ----- |  | ----- | ---------- |  |  | ---------- |  |  |  | -- |  |  |  | --- | 
|                          |  | December 31, 2005 |       |       | December 31, 2004 | 
|                          |  |                   |       |       |                   | 
|                          |  |                   |       | Gross |                   |  | Gross |            |  |  |            | Gross |  |           | Gross | 
|                          |  | Amortized         |       |       | Fair              |  |       | unrealized |  |  | unrealized |       |  | Amortized |       |  | Fair  |  |       | unrealized |  |  | unrealized | 
| in millions             |  | cost              |       |       | value             |  |       | loss       |  |  | gain       |       |  | cost      |       |  | value |  |       | loss       |  |  | gain       | 
|                          |  |                   |       |       |                   |  |       |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            | 
|Fixed-term securities     |  |                   |       |       |                   |  |       |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            |  |  |  |    |  |  |  |     | 
|Less than 1 year          |  |                   | 406   |       |                   |  | 433   |            |  |  | 1          |       |  |           | 28    |  |       |  | 165   |            |  |  | 168        |  |  |  |   |  |  |  | 3   | 
|Between 1 and 5 years     |  |                   | 2,408 |       |                   |  | 2,426 |            |  |  | 5          |       |  |           | 23    |  |       |  | 2,372 |            |  |  | 2,395      |  |  |  | 17 |  |  |  | 40  | 
|More than 5 years         |  |                   | 2,689 |       |                   |  | 2,797 |            |  |  | 3          |       |  |           | 111   |  |       |  | 2,359 |            |  |  | 2,413      |  |  |  | 27 |  |  |  | 81  | 
|                          |  |                   |       |       |                   |  |       |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            | 
|Subtotal                  |  |                   | 5,503 |       |                   |  | 5,656 |            |  |  | 9          |       |  |           | 162   |  |       |  | 4,896 |            |  |  | 4,976      |  |  |  | 44 |  |  |  | 124 | 
|Non-fixed-term securities |  |                   | 2,823 |       |                   |  | 3,604 |            |  |  | 23         |       |  |           | 804   |  |       |  | 2,459 |            |  |  | 2,807      |  |  |  | 40 |  |  |  | 388 | 
|                          |  |                   |       |       |                   |  |       |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            | 
|Total                     |  |                   | 8,326 |       |                   |  | 9,260 |            |  |  | 32         |       |  |           | 966   |  |       |  | 7,355 |            |  |  | 7,783      |  |  |  | 84 |  |  |  | 512 | 
|                          |  |                   |       |       |                   |  |       |            |  |  |            |       |  |           |       |  |       |  |       |            |  |  |            | 

F-47



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##### Table of Contents





|                          |  |                   |       |       |            |  |    |       |       |  |            |  |  |       |   |  |            |  |       |  |  |  |    | 
|------------------------- |  | ----------------- | ----- | ----- | ---------- |  | -- | ----- | ----- |  | ---------- |  |  | ----- | - |  | ---------- |  | ----- |  |  |  | -- | 
|                          |  | December 31, 2005 |      
|                          |  |                   |      
|                          |  | less than         |       |       | 12 months  |  |    |      
|                          |  | 12 months         |       |       | or greater |  |    | Total |      
|                          |  |                   |       |       |            |  |    |       |      
|                          |  |                   |       | Gross |            |  |    |       | Gross |  |            |  |  | Gross |  
|                          |  | Fair              |       |       | unrealized |  |    | Fair  |       |  | unrealized |  |  | Fair  |   |  | unrealized | 
| in millions             |  | value             |       |       | loss       |  |    | value |       |  | loss       |  |  | value |   |  | loss       | 
|                          |  |                   |       |       |            |  |    |       |       |  |            |  |  |       |   |  |            | 
|Fixed-term securities     |  |                   |       |       |            |  |    |       |       |  |            |  |  |       |   |  |            |  |       |  |  |  |    | 
|Less than 1 year          |  |                   | 309   |       |            |  | 1  |       |       |  |           |  |  |       |  |  |            |  | 309   |  |  |  | 1  | 
|Between 1 and 5 years     |  |                   | 964   |       |            |  | 5  |       |       |  |           |  |  |       |  |  |            |  | 964   |  |  |  | 5  | 
|More than 5 years         |  |                   | 357   |       |            |  | 3  |       |       |  |           |  |  |       |  |  |            |  | 357   |  |  |  | 3  | 
|                          |  |                   |       |       |            |  |    |       |       |  |            |  |  |       |   |  |            | 
|Subtotal                  |  |                   | 1,630 |       |            |  | 9  |       |       |  |           |  |  |       |  |  |            |  | 1,630 |  |  |  | 9  | 
|Non-fixed-term securities |  |                   | 303   |       |            |  | 23 |       |       |  |           |  |  |       |  |  |            |  | 303   |  |  |  | 23 | 
|                          |  |                   |       |       |            |  |    |       |       |  |            |  |  |       |   |  |            | 
|Total                     |  |                   | 1,933 |       |            |  | 32 |       |       |  |           |  |  |       |  |  |            |  | 1,933 |  |  |  | 32 | 
|                          |  |                   |       |       |            |  |    |       |       |  |            |  |  |       |   |  |            | 

 


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 




|     |                          
|---- | -------------------------
|(15) | Cash and Cash Equivalents

 


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   




|     |                                     
|---- | ------------------------------------
|(16) | Prepaid Expenses and Deferred Income

       




|     |              
|---- | -------------
|(17) | Capital Stock






F-48



---



##### Table of Contents



 









| |                   
| | ------------------
| | Authorized Capital

   










|     |                           
|---- | --------------------------
|(18) | Additional Paid-in Capital

  


 


F-49



---



##### Table of Contents





|     |                  
|---- | -----------------
|(19) | Retained Earnings



|                        |  |              |        |  |      |  |        |      |  |  |        | 
|----------------------- |  | ------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                        |  | December 31, |       
|                        |  |              |       
| in millions           |  | 2005         |        |  | 2004 |  |        | 2003 | 
|                        |  |              |        |  |      |  |        |      | 
|Legal reserves          |  |              | 45     |  |      |  | 45     |      |  |  | 45     | 
|Other retained earnings |  |              | 25,816 |  |      |  | 19,958 |      |  |  | 16,931 | 
|                        |  |              |        |  |      |  |        |      | 
|Total                   |  |              | 25,861 |  |      |  | 20,003 |      |  |  | 16,976 | 
|                        |  |              |        |  |      |  |        |      | 

       


 




|     |                           
|---- | --------------------------
|(20) | Other Comprehensive Income



|                                                          |  |                   |       |          |                   |  |      |                   |  |  |            |   |  |           |       |   |            |          |      |            |  |  |           |   |  |            |       |   |  |  |      |   |  |  |       |  
|--------------------------------------------------------- |  | ----------------- | ----- | -------- | ----------------- |  | ---- | ----------------- |  |  | ---------- | - |  | --------- | ----- | - | ---------- | -------- | ---- | ---------- |  |  | --------- | - |  | ---------- | ----- | - |  |  | ---- | - |  |  | ----- | -
|                                                          |  | December 31, 2005 |       |          | December 31, 2004 |  |      | December 31, 2003 | 
|                                                          |  |                   |       |          |                   |  |      |                   | 
|                                                          |  |                   |       | Tax      |                   |  |      |                   |  |  | Tax        |   |  |           |       |   |            | Tax      |      |            | 
|                                                          |  |                   |       | benefit/ |                   |  |      |                   |  |  | benefit/   |   |  |           |       |   |            | benefit/ |      |            | 
| in millions                                             |  | Before tax        |       |          | (expense)         |  |      | Net-of-tax        |  |  | Before tax |   |  | (expense) |       |   | Net-of-tax |          |      | Before tax |  |  | (expense) |   |  | Net-of-tax |      
|                                                          |  |                   |       |          |                   |  |      |                   |  |  |            |   |  |           |       |   |            |          |      |            |  |  |           |   |  |            |      
|Foreign currency translation adjustments                  |  |                   | 536   |          |                   |  | 78   |                   |  |  | 614        |   |  |           | 139   |   |            |          | (25  | )          |  |  | 114       |   |  |            | (701  | ) |  |  | (152 | ) |  |  | (853  | )
|Plus (Less) reclassification adjustments affecting income |  |                   | 6     |          |                   |  |     |                   |  |  | 6          |   |  |           | 11    |   |            |          |     |            |  |  | 11        |   |  |            | 71    |   |  |  | 3    |   |  |  | 74    |  
|Unrealized holding gains (losses) arising during period   |  |                   | 5,709 |          |                   |  | (851 | )                 |  |  | 4,858      |   |  |           | 1,349 |   |            |          | (243 | )          |  |  | 1,106     |   |  |            | 1,282 |   |  |  | (35  | ) |  |  | 1,247 |  
|Plus (Less) reclassification adjustments affecting income |  |                   | (169  | )        |                   |  | 9    |                   |  |  | (160       | ) |  |           | (107  | ) |            |          | (5   | )          |  |  | (112      | ) |  |            | (74   | ) |  |  | 14   |   |  |  | (60   | )
|Additional minimum pension liability                      |  |                   | (580  | )        |                   |  | 268  |                   |  |  | (312       | ) |  |           | (935  | ) |            |          | 337  |            |  |  | (598      | ) |  |            | (156  | ) |  |  | 65   |   |  |  | (91   | )
|Cash Flow Hedges                                          |  |                   | 65    |          |                   |  | (8   | )                 |  |  | 57         |   |  |           | 89    |   |            |          | (33  | )          |  |  | 56        |   |  |            | 224   |   |  |  | (89  | ) |  |  | 135   |  
|                                                          |  |                   |       |          |                   |  |      |                   |  |  |            |   |  |           |       |   |            |          |      |            |  |  |           |   |  |            |      
|Total                                                     |  |                   | 5,567 |          |                   |  | (504 | )                 |  |  | 5,063      |   |  |           | 546   |   |            |          | 31   |            |  |  | 577       |   |  |            | 646   |   |  |  | (194 | ) |  |  | 452   |  
|                                                          |  |                   |       |          |                   |  |      |                   |  |  |            |   |  |           |       |   |            |          |      |            |  |  |           |   |  |            |      






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##### Table of Contents





|     |                   
|---- | ------------------
|(21) | Minority Interests



|                     |  |              |       |  |      |  |       | 
|-------------------- |  | ------------ | ----- |  | ---- |  | ----- | 
|                     |  | December 31, |      
|                     |  |              |      
| in millions        |  | 2005         |       |  | 2004 | 
|                     |  |              |       |  |      | 
|Central Europe       |  |              | 2,618 |  |      |  | 2,096 | 
|Pan-European Gas     |  |              | 255   |  |      |  | 126   | 
|U.K.                 |  |              | 81    |  |      |  | 92    | 
|Nordic               |  |              | 1,659 |  |      |  | 1,668 | 
|U.S. Midwest         |  |              | 85    |  |      |  | 103   | 
|Corporate Center     |  |              | 36    |  |      |  | 36    | 
|                     |  |              |       |  |      | 
|Core energy business |  |              | 4,734 |  |      |  | 4,121 | 
|Other activities     |  |              |      |  |      |  | 23    | 
|                     |  |              |       |  |      | 
|Total                |  |              | 4,734 |  |      |  | 4,144 | 
|                     |  |              |       |  |      | 

(22)     Provisions for Pensions






 


03-4






F-51



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  


|                                               |  |      |        |   |      |  |        |  
|---------------------------------------------- |  | ---- | ------ | - | ---- |  | ------ | -
| in millions                                  |  | 2005 |        |   | 2004 | 
|                                               |  |      |        |   |      | 
|Projected benefit obligation as of January 1   |  |      | 15,918 |   |      |  | 13,295 |  
|Service cost                                   |  |      | 232    |   |      |  | 215    |  
|Interest cost                                  |  |      | 777    |   |      |  | 804    |  
|Change in scope of consolidation               |  |      | (375   | ) |      |  | 1,397  |  
|Prior service cost                             |  |      | 32     |   |      |  | 6      |  
|Actuarial losses                               |  |      | 1,618  |   |      |  | 1,182  |  
|Exchange rate differences                      |  |      | 352    |   |      |  | (144   | )
|Other                                          |  |      |       |   |      |  | 6      |  
|Pensions paid                                  |  |      | (842   | ) |      |  | (843   | )
|                                               |  |      |        |   |      | 
|Projected benefit obligation as of December 31 |  |      | 17,712 |   |      |  | 15,918 |  
|                                               |  |      |        |   |      | 



 




  


|                                            |  |      |       |   |      |  |       |  
|------------------------------------------- |  | ---- | ----- | - | ---- |  | ----- | -
| in millions                               |  | 2005 |       |   | 2004 | 
|                                            |  |      |       |   |      | 
|Fair value of plan assets as of January 1   |  |      | 6,399 |   |      |  | 4,922 |  
|Actual return on plan assets                |  |      | 1,198 |   |      |  | 601   |  
|Company contributions                       |  |      | 733   |   |      |  | 182   |  
|Employee contributions                      |  |      | 17    |   |      |  | 16    |  
|Change in scope of consolidation            |  |      | (58   | ) |      |  | 1,220 |  
|Exchange rate differences                   |  |      | 262   |   |      |  | (97   | )
|Pensions paid                               |  |      | (451  | ) |      |  | (439  | )
|Other                                       |  |      | (3    | ) |      |  | (6    | )
|                                            |  |      |       |   |      | 
|Fair value of plan assets as of December 31 |  |      | 8,097 |   |      |  | 6,399 |  
|                                            |  |      |       |   |      | 




   


F-52



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##### Table of Contents











|                  |  |            |    |              |      |  |    |      |  |  |    | 
|----------------- |  | ---------- | -- | ------------ | ---- |  | -- | ---- |  |  | -- | 
|                  |  |            |    | December 31, |     
|                  |  | Target     |    |              |      | 
|in %              |  | Allocation |    |              | 2005 |  |    | 2004 | 
|                  |  |            |    |              |      |  |    |      | 
|Equity securities |  |            | 22 |              |      |  | 45 |      |  |  | 51 | 
|Debt securities   |  |            | 69 |              |      |  | 48 |      |  |  | 42 | 
|Real estate       |  |            | 9  |              |      |  | 5  |      |  |  | 5  | 
|Other             |  |            |   |              |      |  | 2  |      |  |  | 2  | 





|                                |  |              |        |   |      |  |        |  
|------------------------------- |  | ------------ | ------ | - | ---- |  | ------ | -
|                                |  | December 31, |       
|                                |  |              |       
| in millions                   |  | 2005         |        |   | 2004 | 
|                                |  |              |        |   |      | 
|Funded status                   |  |              | 9,615  |   |      |  | 9,519  |  
|Unrecognized actuarial loss     |  |              | (3,192 | ) |      |  | (2,453 | )
|Unrecognized prior service cost |  |              | (27    | ) |      |  | (27    | )
|                                |  |              |        |   |      | 
|Net amount recognized           |  |              | 6,396  |   |      |  | 7,039  |  
|                                |  |              |        |   |      | 



|                                       |  |              |        |   |      |  |        |  
|-------------------------------------- |  | ------------ | ------ | - | ---- |  | ------ | -
|                                       |  | December 31, |       
|                                       |  |              |       
| in millions                          |  | 2005         |        |   | 2004 | 
|                                       |  |              |        |   |      | 
|Provisions for pensions                |  |              | 8,720  |   |      |  | 8,589  |  
|Additional minimum liability           |  |              |        |   |      |  |        |  
|Intangible assets                      |  |              | (29    | ) |      |  | (38    | )
|Accumulated other comprehensive income |  |              | (1,986 | ) |      |  | (1,512 | )
|Other operating assets                 |  |              | (309   | ) |      |  |       |  
|                                       |  |              |        |   |      | 
|Net amount recognized                  |  |              | 6,396  |   |      |  | 7,039  |  
|                                       |  |              |        |   |      | 

  


 




F-53



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##### Table of Contents



 




|                               |  |      |      |   |      |  |      |      |  |  |      |  
|------------------------------ |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
| in millions                  |  | 2005 |      |   | 2004 |  |      | 2003 | 
|                               |  |      |      |   |      |  |      |      | 
|Employer service cost          |  |      | 215  |   |      |  | 190  |      |  |  | 152  |  
|Interest cost                  |  |      | 777  |   |      |  | 783  |      |  |  | 701  |  
|Expected return on plan assets |  |      | (448 | ) |      |  | (422 | )    |  |  | (327 | )
|Prior service cost             |  |      | 33   |   |      |  | 25   |      |  |  | 21   |  
|Net amortization of losses     |  |      | 85   |   |      |  | 40   |      |  |  | 23   |  
|                               |  |      |      |   |      |  |      |      | 
|Total                          |  |      | 662  |   |      |  | 616  |      |  |  | 570  |  
|                               |  |      |      |   |      |  |      |      | 

     


 




|              |  |  |       | 
|------------- |  |  | ----- | 
| in millions |  | 
|              |  | 
|2006          |  |  | 865   | 
|2007          |  |  | 889   | 
|2008          |  |  | 915   | 
|2009          |  |  | 939   | 
|2010          |  |  | 960   | 
|2011-2015     |  |  | 5,009 | 
|              |  |  |      
|Total         |  |  | 9,577 | 
|              |  |  |      







|                               |  |                   |      |        |                   |  |        |        |  |  |         |        |  |         |        |  |        |  |      |  |  |  |      | 
|------------------------------ |  | ----------------- | ---- | ------ | ----------------- |  | ------ | ------ |  |  | ------- | ------ |  | ------- | ------ |  | ------ |  | ---- |  |  |  | ---- | 
|                               |  | December 31, 2005 |      |        | December 31, 2004 | 
|                               |  |                   |      |        |                   | 
|                               |  |                   |      | United |                   |  | United |        |  |  |         | United |  |         | United | 
|in %                           |  | Germany           |      |        | Kingdom           |  |        | States |  |  | Germany |        |  | Kingdom |        |  | States | 
|                               |  |                   |      |        |                   |  |        |        |  |  |         |        |  |         |        |  |        | 
|Discount rate                  |  |                   | 4.00 |        |                   |  | 4.80   |        |  |  | 5.50    |        |  |         | 4.75   |  |        |  | 5.30 |  |  |  | 5.75 | 
|Salary increase rate           |  |                   | 2.75 |        |                   |  | 4.00   |        |  |  | 5.25    |        |  |         | 2.75   |  |        |  | 4.00 |  |  |  | 4.50 | 
|Expected return on plan assets |  |                   | 4.00 |        |                   |  | 5.50   |        |  |  | 8.25    |        |  |         | 4.75   |  |        |  | 6.70 |  |  |  | 8.25 | 
|Pension increase rate          |  |                   | 1.50 |        |                   |  | 2.80   |        |  |  |        |        |  |         | 1.25   |  |        |  | 2.80 |  |  |  |     | 

F-54



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##### Table of Contents



(23)     Other Provisions




Description of Asset Retirement Obligations






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | retirement costs shown in sub-items 1ab) and 1ba) for
    decommissioning of nuclear power plants in Germany in the amount
    of
    8,400 million
    (2004:
    8,204 million)
    and in Sweden in the amount of
    403 million
    (2004:
    404 million),                                                                                                                                                         
|
| |  | environmental improvement measures reported under
    sub-item 8) related to the locations of non-nuclear power
    plants, including removal of electricity transmission and
    distribution equipment in the amount of
    388 million
    (2004:
    327 million) and                                                                                                                                                   
|
| |  | environmental improvements at gas storage facilities in the
    amount of
    90 million
    (2004:
    77 million)
    and at opencast mining facilities in the amount of
    61 million
    (2004:
    59 million)
    as well as the decommissioning of oil and gas field
    infrastructure in the amount of
    319 million
    (2004:
    277 million).
    These obligations are also reported under sub-item 8).



|                                           |  |      |       |   |      |  |       |  
|------------------------------------------ |  | ---- | ----- | - | ---- |  | ----- | -
| in millions                              |  | 2005 |       |   | 2004 | 
|                                           |  |      |       |   |      | 
|Balance as of January 1                    |  |      | 9,348 |   |      |  | 9,269 |  
|Liabilities incurred in the current period |  |      | 37    |   |      |  | 11    |  
|Liabilities settled in the current period  |  |      | (181  | ) |      |  | (164  | )
|Change in scope of consolidation           |  |      | 33    |   |      |  | 2     |  
|Accretion expense                          |  |      | 511   |   |      |  | 499   |  
|Revision in estimated cash flows           |  |      | (126  | ) |      |  | (272  | )
|Other changes                              |  |      | 39    |   |      |  | 3     |  
|                                           |  |      |       |   |      | 
|Balance as of December 31                  |  |      | 9,661 |   |      |  | 9,348 |  
|                                           |  |      |       |   |      | 



Other Provisions




|                                                                              |                                        |              |        |       |      |  |        |       | 
|----------------------------------------------------------------------------- | -------------------------------------- | ------------ | ------ | ----- | ---- |  | ------ | ----- | 
|                                                                              |                                        | December 31, |       
|                                                                              |                                        |              |       
| in millions                                                                 |                                        | 2005         |        |       | 2004 | 
|                                                                              |                                        |              |        |       |      | 
|Provisions for nuclear waste management (1)                                   |                                        |              | 13,362 |       |      |  | 13,481 |      
|                                                                              | Disposal of nuclear fuel rods          |              |        | 5,003 |      |  |        | 5,370 | 
|                                                                              | Asset retirement obligation (SFAS 143) |              |        | 8,803 |      |  |        | 8,608 | 
|                                                                              | Waste disposal                         |              |        | 425   |      |  |        | 378   | 
|                                                                              | less advance payments                  |              |        | 869   |      |  |        | 875   | 
|Provisions for taxes (2)                                                      |                                        |              | 3,000  |       |      |  | 2,871  |      
|Provisions for personnel costs (3)                                            |                                        |              | 1,540  |       |      |  | 1,611  |      
|Provisions for supplier-related contracts (4)                                 |                                        |              | 2,150  |       |      |  | 2,818  |      
|Provisions for customer-related contracts (5)                                 |                                        |              | 306    |       |      |  | 439    |      
|U.S. regulatory liabilities (6)                                               |                                        |              | 507    |       |      |  | 415    |      
|Provisions for environmental remediation (7)                                  |                                        |              | 309    |       |      |  | 337    |      
|Provisions for environmental improvements, including land
    reclamation (8) |                                        |              | 1,725  |       |      |  | 1,657  |      
|Miscellaneous (9)                                                             |                                        |              | 2,243  |       |      |  | 2,024  |      
|                                                                              |                                        |              |        |       |      | 
|Total                                                                         |                                        |              | 25,142 |       |      |  | 25,653 |      
|                                                                              |                                        |              |        |       |      | 

F-55



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##### Table of Contents



 


 


1) Provisions for Nuclear Waste Management


a) Germany




 






aa) Management of Spent Nuclear Fuel Rods










| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | the costs of fuel reprocessing and                                                     
|
| |  | the costs of outbound transportation and the intermediate
    storage of nuclear waste.







| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | contractual costs for procuring intermediate containers and
    intermediate on-site
    storage on the plant premises and                                                          
|
| |  | costs of transporting spent fuel rods to conditioning
    facilities, conditioning costs and costs for procuring permanent
    storage containers as determined by external studies.

F-56



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##### Table of Contents





ab) Nuclear Plant Decommissioning






ac) Waste from Plant Operations




b) Sweden




ba) Decommissioning




bb) Nuclear Fuel Rods and Nuclear Waste in Sweden






c) United Kingdom and United States




2) Taxes




F-57



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##### Table of Contents



3) Personnel Liabilities




4) Supplier-Related Liabilities




5) Customer-Related Liabilities




6) U.S. Regulatory Liabilities




7) Environmental Remediation




8) Environmental Improvements and Similar Liabilities,
including Land Reclamation


 




9) Miscellaneous




F-58



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##### Table of Contents





|     |            
|---- | -----------
|(24) | Liabilities



|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        |  |       |  |  |  |        |  |  |  |     |  | 
|----------------------------------------------------------------------------- | ------------------------------------- | ----------------- | ------ | --------------------- | ----------------- | ------------- | ------- | ----- |  | ---- | --------------------- |  | ------------- | ------ | ------- |  | ----- | ----- | --- | ------ | ------ |  | ------ | ---- |  | ------- | ------------ | --- | ------ |  | ----- |  |  |  | ------ |  |  |  | --- |  | 
|                                                                              |                                       | December 31, 2005 |        |                       | December 31, 2004 |              
|                                                                              |                                       |                   |        |                       |                   |              
|                                                                              |                                       |                   |        | With a remaining term |                   |               |         |       |  |      | With a remaining term |  |               |       
|                                                                              |                                       |                   |        | of                    |                   |               |         |       |  |      | of                    |  |               |       
|                                                                              |                                       |                   |        |                       |                   |               | Average |       |  |      |                       |  |               |        | Average | 
|                                                                              |                                       |                   |        |                       |                   | interest rate |         |       |  |      |                       |  | interest rate |       
|                                                                              |                                       |                   |        | up to                 |                   |               | 1 to 5  |       |  | over |                       |  | up to 1 year  |        |         |  |       | up to |     |        | 1 to 5 |  |        | over |  |         | up to 1 year |    
| in millions                                                                 |                                       | Total             |        |                       | 1 Year            |               |         | Years |  |      | 5 Years               |  |               | (in %) |         |  | Total |       |     | 1 Year |        |  | Years  |      |  | 5 Years |              |     | (in %) | 
|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        | 
|Bonds (including Medium Term Note programs)                                   |                                       |                   | 9,538  |                       |                   |               | 732     |       |  |      | 5,195                 |  |               |        | 3,611   |  |       |       | 5.7 |        |        |  | 9,148  |      |  |         | 355          |     |        |  | 5,306 |  |  |  | 3,487  |  |  |  | 2.4 | 
|Commercial paper                                                              |                                       |                   |       |                       |                   |               |        |       |  |      |                      |  |               |        |        |  |       |       |    |        |        |  | 3,631  |      |  |         | 3,631        |     |        |  |      |  |  |  |       |  |  |  | 2.1 | 
|Bank loans/ Liabilities to banks                                              |                                       |                   | 1,530  |                       |                   |               | 424     |       |  |      | 729                   |  |               |        | 377     |  |       |       | 5.0 |        |        |  | 4,130  |      |  |         | 1,010        |     |        |  | 1,506 |  |  |  | 1,614  |  |  |  | 3.7 | 
|Bills payable                                                                 |                                       |                   | 42     |                       |                   |               |        |       |  |      | 42                    |  |               |        |        |  |       |       |    |        |        |  | 51     |      |  |         | 3            |     |        |  | 48    |  |  |  |       |  |  |  | 2.6 | 
|Other financial liabilities                                                   |                                       |                   | 1,306  |                       |                   |               | 742     |       |  |      | 165                   |  |               |        | 399     |  |       |       | 2.7 |        |        |  | 1,648  |      |  |         | 155          |     |        |  | 547   |  |  |  | 946    |  |  |  | 4.4 | 
|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        | 
|Financial liabilities to banks and third parties                              |                                       |                   | 12,416 |                       |                   |               | 1,898   |       |  |      | 6,131                 |  |               |        | 4,387   |  |       |       |     |        |        |  | 18,608 |      |  |         | 5,154        |     |        |  | 7,407 |  |  |  | 6,047  |  |  |  |     | 
|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        | 
|Financial liabilities to affiliated companies                                 |                                       |                   | 134    |                       |                   |               | 128     |       |  |      |                      |  |               |        | 6       |  |       |       | 3.1 |        |        |  | 134    |      |  |         | 128          |     |        |  |      |  |  |  | 6      |  |  |  | 2.5 | 
|Financial liabilities to associated companies and other share
    investments |                                       |                   | 1,812  |                       |                   |               | 1,781   |       |  |      | 12                    |  |               |        | 19      |  |       |       | 4.4 |        |        |  | 1,834  |      |  |         | 1,754        |     |        |  | 20    |  |  |  | 60     |  |  |  | 3.5 | 
|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        | 
|Financial liabilities to group companies                                      |                                       |                   | 1,946  |                       |                   |               | 1,909   |       |  |      | 12                    |  |               |        | 25      |  |       |       |     |        |        |  | 1,968  |      |  |         | 1,882        |     |        |  | 20    |  |  |  | 66     |  |  |  |     | 
|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        | 
|Financial liabilities                                                         |                                       |                   | 14,362 |                       |                   |               | 3,807   |       |  |      | 6,143                 |  |               |        | 4,412   |  |       |       |     |        |        |  | 20,576 |      |  |         | 7,036        |     |        |  | 7,427 |  |  |  | 6,113  |  |  |  |     | 
|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        | 
|Accounts payable                                                              |                                       |                   | 5,288  |                       |                   |               | 5,272   |       |  |      | 16                    |  |               |        |        |  |       |       |     |        |        |  | 3,662  |      |  |         | 3,627        |     |        |  | 35    |  |  |  |       |  |  |  |     | 
|Operating labilities to affiliated companies                                  |                                       |                   | 105    |                       |                   |               | 59      |       |  |      | 3                     |  |               |        | 43      |  |       |       |     |        |        |  | 147    |      |  |         | 103          |     |        |  |      |  |  |  | 44     |  |  |  |     | 
|Operating liabilities to associated companies and other share
    investments |                                       |                   | 188    |                       |                   |               | 98      |       |  |      | 70                    |  |               |        | 20      |  |       |       |     |        |        |  | 184    |      |  |         | 92           |     |        |  | 71    |  |  |  | 21     |  |  |  |     | 
|Capital expenditure grants                                                    |                                       |                   | 270    |                       |                   |               | 19      |       |  |      | 96                    |  |               |        | 155     |  |       |       |     |        |        |  | 271    |      |  |         | 26           |     |        |  | 93    |  |  |  | 152    |  |  |  |     | 
|Construction grants from energy consumers                                     |                                       |                   | 3,674  |                       |                   |               | 420     |       |  |      | 736                   |  |               |        | 2,518   |  |       |       |     |        |        |  | 3,558  |      |  |         | 347          |     |        |  | 692   |  |  |  | 2,519  |  |  |  |     | 
|Advance payments                                                              |                                       |                   | 488    |                       |                   |               | 488     |       |  |      |                      |  |               |        |        |  |       |       |     |        |        |  | 725    |      |  |         | 722          |     |        |  | 3     |  |  |  |       |  |  |  |     | 
|Other operating liabilities                                                   |                                       |                   | 9,039  |                       |                   |               | 6,946   |       |  |      | 668                   |  |               |        | 1,425   |  |       |       |     |        |        |  | 5,507  |      |  |         | 3,793        |     |        |  | 323   |  |  |  | 1,391  |  |  |  |     | 
|                                                                              | thereof taxes                         |                   |        | 614                   |                   |               |         | 614   |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        | 989  |  |         |              | 989 |        |  |       |  |  |  |        |  |  |  |     |  | 
|                                                                              | thereof social security contributions |                   |        | 63                    |                   |               |         | 63    |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        | 62   |  |         |              | 62  |        |  |       |  |  |  |        |  |  |  |     |  | 
|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        | 
|Operating liabilities                                                         |                                       |                   | 19,052 |                       |                   |               | 13,302  |       |  |      | 1,589                 |  |               |        | 4,161   |  |       |       |     |        |        |  | 14,054 |      |  |         | 8,710        |     |        |  | 1,217 |  |  |  | 4,127  |  |  |  |     | 
|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        | 
|                                                                             
|Liabilities                                                                   |                                       |                   | 33,414 |                       |                   |               | 17,109  |       |  |      | 7,732                 |  |               |        | 8,573   |  |       |       |     |        |        |  | 34,630 |      |  |         | 15,746       |     |        |  | 8,644 |  |  |  | 10,240 |  |  |  |     | 
|                                                                              |                                       |                   |        |                       |                   |               |         |       |  |      |                       |  |               |        |         |  |       |       |     |        |        |  |        |      |  |         |              |     |        | 

 


Financial Liabilities




F-59



---



##### Table of Contents











| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | the repayment of the affected financing arrangement                                                     
|
| |  | the declaration that a liability becomes due and payable before
    its stated maturity                 
|
| |  | the triggering of cross defaults in other financing arrangements                                        
|
| |  | E.ONs access to additional financing on favorable terms
    being severely curtailed or even eliminated

Corporate Center


20 billion
Medium Term Note Program







| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | 4.25 billion
    issued by E.ON International Finance with a coupon of
    5.75 percent and a maturity in May 2009                           
|
| |  | 0.9 billion
    issued by E.ON International Finance with a coupon of
    6.375 percent and a maturity in May 2017                           
|
| |  | GBP 500 million or
    725 million
    issued by E.ON International Finance with a coupon of
    6.375 percent and a maturity in May 2012    
|
| |  | GBP 0.975 billion or
    1.37 billion
    issued by E.ON International Finance with a coupon of
    6.375 percent and a maturity in June 2032



F-60



---



##### Table of Contents






10 billion
Commercial Paper Program


  


10 billion
Syndicated Multi-Currency Revolving Credit Facility
Agreement


    back-up  




Bilateral Credit Lines


  .


F-61



---



##### Table of Contents



.




Central Europe


Bank Loans, Credit Facilities


  back-up  


 


Pan-European Gas


Long-Term Loans


  


  


U.K.


Bonds








| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | GBP 250 million or
    362 million
    bond issued by E.ON UK plc with a coupon of 8.5 percent
    maturing in July 2006, of which GBP 44 million or
    62 million
    was held by external investors 
|
| |  | GBP 250 million or
    362 million
    bond issued by E.ON UK plc with a coupon of 6.25 percent
    maturing in April 2024, of which GBP 8 million or
    11 million
    was held by external investors

F-62



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | GBP 150 million or
    217 million
    issued by Central Networks plc (previously Midlands Electricity
    plc, a wholly-owned subsidiary of E.ON UK plc) with a coupon of
    7.375 percent maturing in November 2007 (part of the
    Midlands Debt), of which GBP 0.4 million or approximately
    0.6 million
    was held by external investors
|
| |  | 500 million
    Eurobond issued by E.ON UK plc with a coupon of 5.0 percent
    maturing in July 2009, of which
    264 million
    was held by external investors                                                                                                                                                                                  
|
| |  | USD 410 million or
    347 million
    Yankee Bond issued by Powergen (East Midlands) Investments,
    London, U.K., with a coupon of 7.45 percent maturing in May
    2007, of which USD 173 million or
    147 million
    was held by external investors                                                                                         



Nordic


E.ON Sverige Medium Term Note Program


 


E.ON Sverige Commercial Paper Programs


 


 




Bank Loans, Credit Facilities


 


U.S. Midwest


Bonds and Medium Term Note Programs


 


F-63



---



##### Table of Contents







   


Bilateral Credit Lines, Bank Loans


 






|                                                 |  |           |       |  |           |  |     |           |  |  |           |  |  |           |     |  |            |  |       |       |  |  |       |  |  |  |        | 
|------------------------------------------------ |  | --------- | ----- |  | --------- |  | --- | --------- |  |  | --------- |  |  | --------- | --- |  | ---------- |  | ----- | ----- |  |  | ----- |  |  |  | ------ | 
|                                                 |  | Repayment |       |  | Repayment |  |     | Repayment |  |  | Repayment |  |  | Repayment |     |  | Repayment  |  |       |      
| in millions                                    |  | 2006      |       |  | 2007      |  |     | 2008      |  |  | 2009      |  |  | 2010      |     |  | after 2010 |  |       | Total | 
|                                                 |  |           |       |  |           |  |     |           |  |  |           |  |  |           |     |  |            |  |       |       | 
|Bonds (including MTN programs)                   |  |           | 732   |  |           |  | 219 |           |  |  | 283       |  |  |           | 275 |  |            |  | 4,418 |       |  |  | 3,611 |  |  |  | 9,538  | 
|Commercial paper                                 |  |           |      |  |           |  |    |           |  |  |          |  |  |           |    |  |            |  |      |       |  |  |      |  |  |  |       | 
|Bank loans/ Liabilities to banks                 |  |           | 424   |  |           |  | 183 |           |  |  | 116       |  |  |           | 74  |  |            |  | 356   |       |  |  | 377   |  |  |  | 1,530  | 
|Bills payable                                    |  |           |      |  |           |  | 40  |           |  |  | 2         |  |  |           |    |  |            |  |      |       |  |  |      |  |  |  | 42     | 
|Other financial liabilities                      |  |           | 742   |  |           |  | 39  |           |  |  | 99        |  |  |           | 24  |  |            |  | 3     |       |  |  | 399   |  |  |  | 1,306  | 
|                                                 |  |           |       |  |           |  |     |           |  |  |           |  |  |           |     |  |            |  |       |       | 
|Financial liabilities to banks and third parties |  |           | 1,898 |  |           |  | 481 |           |  |  | 500       |  |  |           | 373 |  |            |  | 4,777 |       |  |  | 4,387 |  |  |  | 12,416 | 
|                                                 |  |           |       |  |           |  |     |           |  |  |           |  |  |           |     |  |            |  |       |       | 
|                                                
|Used credit lines                                |  |           | 93    |  |           |  | 14  |           |  |  | 14        |  |  |           |    |  |            |  | 8     |       |  |  | 52    |  |  |  | 181    | 
|Unused credit lines                              |  |           | 5,597 |  |           |  |    |           |  |  |          |  |  |           |    |  |            |  | 5,000 |       |  |  | 122   |  |  |  | 10,719 | 
|                                                 |  |           |       |  |           |  |     |           |  |  |           |  |  |           |     |  |            |  |       |       | 
|Used and unused credit lines                     |  |           | 5,690 |  |           |  | 14  |           |  |  | 14        |  |  |           |    |  |            |  | 5,008 |       |  |  | 174   |  |  |  | 10,900 | 
|                                                 |  |           |       |  |           |  |     |           |  |  |           |  |  |           |     |  |            |  |       |       | 

F-64



---



##### Table of Contents





|                                                 |  |                   |       |  |          |  |        |           |  |  |               |  |  |       |    |  |  |  |        | 
|------------------------------------------------ |  | ----------------- | ----- |  | -------- |  | ------ | --------- |  |  | ------------- |  |  | ----- | -- |  |  |  | ------ | 
|                                                 |  | December 31, 2005 |      
|                                                 |  |                   |      
| in millions                                    |  | 0 - 3%            |       |  | 3.1 - 7% |  |        | 7.1 - 10% |  |  | more than 10% |  |  | Total |   
|                                                 |  |                   |       |  |          |  |        |           |  |  |               |  |  |       |   
|Bonds (including MTN programs)                   |  |                   | 571   |  |          |  | 8,624  |           |  |  | 343           |  |  |       |   |  |  |  | 9,538  | 
|Commercial paper                                 |  |                   |      |  |          |  |       |           |  |  |              |  |  |       |   |  |  |  |       | 
|Bank loans/ Liabilities to banks                 |  |                   | 765   |  |          |  | 762    |           |  |  | 3             |  |  |       |   |  |  |  | 1,530  | 
|Bills payable                                    |  |                   |      |  |          |  | 42     |           |  |  |              |  |  |       |   |  |  |  | 42     | 
|Other financial liabilities                      |  |                   | 161   |  |          |  | 1,124  |           |  |  | 4             |  |  |       | 17 |  |  |  | 1,306  | 
|                                                 |  |                   |       |  |          |  |        |           |  |  |               |  |  |       |   
|Financial liabilities to banks and third parties |  |                   | 1,497 |  |          |  | 10,552 |           |  |  | 350           |  |  |       | 17 |  |  |  | 12,416 | 
|                                                 |  |                   |       |  |          |  |        |           |  |  |               |  |  |       |   



|                                                                            |  |              |       |  |      |  |       | 
|--------------------------------------------------------------------------- |  | ------------ | ----- |  | ---- |  | ----- | 
|                                                                            |  | December 31, |      
|                                                                            |  |              |      
| in millions                                                               |  | 2005         |       |  | 2004 | 
|                                                                            |  |              |       |  |      | 
|Bank loans collateralized by mortgages on real estate                       |  |              | 141   |  |      |  | 1,147 | 
|Other collateralized bank loans                                             |  |              | 51    |  |      |  | 805   | 
|Uncollateralized bank loans, drawings on credit lines,
    short-term loans |  |              | 1,338 |  |      |  | 2,178 | 
|                                                                            |  |              |       |  |      | 
|Total                                                                       |  |              | 1,530 |  |      |  | 4,130 | 
|                                                                            |  |              |       |  |      | 

   


 


   


Operating Liabilities


 


 


     


F-65



---



##### Table of Contents



(25)     Contingencies and
Commitments




Financial Guarantees




         







  





 


F-66



---



##### Table of Contents







Indemnification Agreements


   


Other Guarantees


 


Long-Term Obligations












F-67



---



##### Table of Contents



 
















|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |        |  |  |  |        | 
|------------------------------------------------- |  | ----- | ------- |  | ---------------- |  | ------ | ----------- |  |  | ----------- |  |  | ------------- | ------ |  |  |  | ------ | 
| in millions                                     |  | Total |         |  | Less than 1 Year |  |        | 1 - 3 Years |  |  | 3 - 5 Years |  |  | After 5 Years |       
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       
|Natural gas                                       |  |       | 164,634 |  |                  |  | 15,292 |             |  |  | 26,565      |  |  |               | 34,835 |  |  |  | 87,942 | 
|Oil                                               |  |       |        |  |                  |  |       |             |  |  |            |  |  |               |       |  |  |  |       | 
|Coal                                              |  |       | 2,889   |  |                  |  | 1,135  |             |  |  | 1,099       |  |  |               | 485    |  |  |  | 170    | 
|Lignite and other fossil fuels                    |  |       | 1,089   |  |                  |  | 33     |             |  |  | 66          |  |  |               | 66     |  |  |  | 924    | 
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       
|Total fossil fuel purchase obligations            |  |       | 168,612 |  |                  |  | 16,460 |             |  |  | 27,730      |  |  |               | 35,386 |  |  |  | 89,036 | 
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       
|Electricity purchase obligations                  |  |       | 4,228   |  |                  |  | 1,231  |             |  |  | 915         |  |  |               | 515    |  |  |  | 1,567  | 
|Other purchase obligations                        |  |       | 1,024   |  |                  |  | 208    |             |  |  | 238         |  |  |               | 135    |  |  |  | 443    | 
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       
|Total long-term purchase commitments/obligations  |  |       | 173,864 |  |                  |  | 17,899 |             |  |  | 28,883      |  |  |               | 36,036 |  |  |  | 91,046 | 
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       
|Major repairs                                     |  |       | 19      |  |                  |  | 14     |             |  |  | 5           |  |  |               |       |  |  |  |       | 
|Environmental protection measures                 |  |       | 29      |  |                  |  | 3      |             |  |  | 5           |  |  |               | 3      |  |  |  | 18     | 
|Other (including capital expenditure commitments) |  |       | 1,791   |  |                  |  | 647    |             |  |  | 416         |  |  |               | 263    |  |  |  | 465    | 
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       
|Total other purchase commitments/obligations      |  |       | 1,839   |  |                  |  | 664    |             |  |  | 426         |  |  |               | 266    |  |  |  | 483    | 
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       
|Other financial obligations                       |  |       | 4,299   |  |                  |  | 237    |             |  |  | 3,681       |  |  |               | 205    |  |  |  | 176    | 
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       
|Loan commitments                                  |  |       | 1,132   |  |                  |  | 364    |             |  |  | 193         |  |  |               | 14     |  |  |  | 561    | 
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       
|Total                                             |  |       | 181,134 |  |                  |  | 19,164 |             |  |  | 33,183      |  |  |               | 36,521 |  |  |  | 92,266 | 
|                                                  |  |       |         |  |                  |  |        |             |  |  |             |  |  |               |       

F-68



---



##### Table of Contents



Rental, Tenancy and Lease Agreements




|              |  |  |     | 
|------------- |  |  | --- | 
| in millions |  | 
|              |  | 
|2006          |  |  | 136 | 
|2007          |  |  | 121 | 
|2008          |  |  | 107 | 
|2009          |  |  | 65  | 
|2010          |  |  | 69  | 
|Thereafter    |  |  | 236 | 
|              |  |  |    
|Total         |  |  | 734 | 
|              |  |  |    

  


(26)     Litigation and Claims






20-F, 20-F,


F-69



---



##### Table of Contents





|     |                                                 
|---- | ------------------------------------------------
|(27) | Supplemental Disclosure of Cash Flow Information



|                                            |                                                                                                                |      |  |       |      |  |  |       |  |  |  |       | 
|------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ---- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
| in millions                               |                                                                                                                | 2005 |  |       | 2004 |  |  | 2003  | 
|                                            |                                                                                                                |      |  |       |      |  |  |       | 
|Cash paid during the year for               |                                                                                                                |      |  |       |      |  |  |       |  |  |  |      
|                                            | Interest, net of amounts capitalized                                                                           |      |  | 966   |      |  |  | 1,101 |  |  |  | 1,082 | 
|                                            | Income taxes, net of refunds                                                                                   |      |  | 1,059 |      |  |  | 1,360 |  |  |  | 1,022 | 
|Non-cash investing and financing activities |                                                                                                                |      |  |       |      |  |  |       |  |  |  |      
|                                            | Increase of stakes in subsidiaries in exchange for distribution
    of E.ON AG shares to minority shareholders |      |  | 35    |      |  |  | 182   |  |  |  | 153   | 
|                                            | Loan notes issued in lieu of cash purchase price payments for
    Caledonia                                    |      |  | 595   |      |  |  |      |  |  |  |      | 
|                                            | Exchange and contribution of assets as part of acquisitions                                                    |      |  | 171   |      |  |  |      |  |  |  |      | 

        








            






|     |                                                          
|---- | ---------------------------------------------------------
|(28) | Derivative Financial Instruments and Hedging Transactions

Strategy and Objectives




F-70



---



##### Table of Contents











Fair Value Hedges


  


Cash Flow Hedges






   


F-71



---



##### Table of Contents



 


Net Investment Hedges


 


Valuation of Derivative Instruments








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Currency, electricity, gas, oil and coal forward contracts, swap
    and emissions-related derivatives are valued separately at their
    forward rates and prices as of the balance-sheet date. Forward
    rates and prices are based on spot rates and prices, with
    forward premiums and discounts taken into consideration.                                                                                                                                                                              
|
| |  | Market prices for currency, electricity and gas options are
    valued using standard option pricing models commonly used in the
    market. The fair values of caps, floors and collars are
    determined on the basis of quoted market prices or on
    calculations based on option pricing models.                                                                                                                                                                                                          
|
| |  | The fair values of existing instruments to hedge interest rate
    risk are determined by discounting future cash flows using
    market interest rates over the remaining term of the instrument.
    Discounted cash values are determined for interest rate,
    cross-currency and cross-currency interest-rate swaps for each
    individual transaction as of the balance-sheet date. Interest
    exchange amounts are considered with an effect on current
    results at the date of payment or accrual.
|
| |  | Equity swaps are valued on the basis of the stock prices of the
    underlying equities, taking into consideration any financing
    components.                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Exchange-traded energy futures and option contracts are valued
    individually at daily settlement prices determined on the
    futures markets that are published by their respective clearing
    houses. Paid initial margins are disclosed under Financial
    receivables and other financial assets. Variation margins
    received or paid during the term of such contracts are stated
    under other liabilities or other assets, respectively.                                                     
|
| |  | Certain long-term energy contracts are valued by the use of
    valuation models that include average probabilities and take
    into account individual contract details and variables.                                                                                                                                                                                                                                                                                                                         

 


F-72



---



##### Table of Contents





|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |       |        |  
|--------------------------------------------------- | ------------------- | ----------------- | -------- | ------- | ----------------- |  | ----- | ------- | ----- | - | -------- | -------- | ------- |  | ----- | ----- | ------ | -
|                                                    |                     | December 31, 2005 |          |         | December 31, 2004 | 
|Total Volume of Foreign Currency, Interest-Rate and |                     |                   |          |         |                   | 
|Equity-Based Derivatives                            |                     | Nominal           |          |         | Fair              |  |       | Nominal |       |   | Fair     |         
| in millions                                       |                     | value             |          |         | value             |  |       | value   |       |   | value    |         
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|FX forward transactions                             |                     |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |      
|                                                    | Buy                 |                   |          | 4,091.3 |                   |  |       | 79.2    |       |   |          | 4,238.2  |         |  |       | (41.3 | )     
|                                                    | Sell                |                   |          | 8,331.2 |                   |  |       | (81.7   | )     |   |          | 5,328.6  |         |  |       | 134.2 |       
|FX currency options                                 |                     |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |      
|                                                    | Buy                 |                   |          | 227.7   |                   |  |       | 32.8    |       |   |          | 782.7    |         |  |       | 46.7  |       
|                                                    | Sell                |                   |          | 139.6   |                   |  |       | (39.0   | )     |   |          | 422.2    |         |  |       | (36.4 | )     
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Subtotal                                            |                     |                   | 12,789.8 |         |                   |  | (8.7  | )       |       |   | 10,771.7 |          |         |  | 103.2 |      
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Cross-currency swaps                                |                     |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |      
|                                                    | up to 1 year        |                   |          | 1,734.7 |                   |  |       | 34.7    |       |   |          | 499.1    |         |  |       | (7.0  | )     
|                                                    | 1 year to 5 years   |                   |          | 8,163.2 |                   |  |       | 57.8    |       |   |          | 11,033.7 |         |  |       | 484.2 |       
|                                                    | more than 5 years   |                   |          | 6,358.4 |                   |  |       | 66.6    |       |   |          | 7,163.8  |         |  |       | 236.3 |       
|Cross-currency interest-rate swaps                  |                     |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |      
|                                                    | up to 1 year        |                   |          | 125.0   |                   |  |       | 13.1    |       |   |          | 102.3    |         |  |       | 1.4   |       
|                                                    | 1 year to 5 years   |                   |          | 316.4   |                   |  |       | 5.0     |       |   |          | 125.0    |         |  |       | 12.1  |       
|                                                    | more than 5 years   |                   |          |        |                   |  |       |        |       |   |          | 297.4    |         |  |       | (38.5 | )     
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Subtotal                                            |                     |                   | 16,697.7 |         |                   |  | 177.2 |         |       |   | 19,221.3 |          |         |  | 688.5 |      
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Interest-rate swaps                                 |                     |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |      
|                                                    | Fixed-rate payer    |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |       |       
|                                                    |                     | up to 1 year      |          |         | 612.2             |  |       |         | (11.8 | ) |          |          | 371.0   |  |       |       | (5.4   | )
|                                                    |                     | 1 year to 5 years |          |         | 1,294.9           |  |       |         | (44.1 | ) |          |          | 2,092.5 |  |       |       | (107.9 | )
|                                                    |                     | more than 5 years |          |         | 1,033.5           |  |       |         | (18.0 | ) |          |          | 373.3   |  |       |       | (36.6  | )
|                                                    | Fixed-rate receiver |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |       |       
|                                                    |                     | up to 1 year      |          |         |                  |  |       |         |      |   |          |          | 23.3    |  |       |       | 0.3    |  
|                                                    |                     | 1 year to 5 years |          |         | 5,364.4           |  |       |         | 64.3  |   |          |          | 3,914.0 |  |       |       | 100.6  |  
|                                                    |                     | more than 5 years |          |         | 1,196.4           |  |       |         | (20.7 | ) |          |          | 147.0   |  |       |       | 4.5    |  
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Subtotal                                            |                     |                   | 9,501.4  |         |                   |  | (30.3 | )       |       |   | 6,921.1  |          |         |  | (44.5 | )    
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Interest-rate options                               |                     |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |      
|                                                    | Buy                 |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |       |       
|                                                    |                     | up to 1 year      |          |         |                  |  |       |         |      |   |          |          | 554.6   |  |       |       | (7.2   | )
|                                                    |                     | 1 year to 5 years |          |         |                  |  |       |         |      |   |          |          |        |  |       |       |       |  
|                                                    |                     | more than 5 years |          |         |                  |  |       |         |      |   |          |          |        |  |       |       |       |  
|                                                    | Sell                |                   |          |         |                   |  |       |         |       |   |          |          |         |  |       |       |       
|                                                    |                     | up to 1 year      |          |         |                  |  |       |         |      |   |          |          | 110.9   |  |       |       | (2.0   | )
|                                                    |                     | 1 year to 5 years |          |         |                  |  |       |         |      |   |          |          |        |  |       |       |       |  
|                                                    |                     | more than 5 years |          |         |                  |  |       |         |      |   |          |          |        |  |       |       |       |  
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Subtotal                                            |                     |                   | 0.0      |         |                   |  | 0.0   |         |       |   | 665.5    |          |         |  | (9.2  | )    
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Equity swaps                                        |                     |                   |         |         |                   |  |      |         |       |   | 63.8     |          |         |  | 103.0 |      
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Subtotal                                            |                     |                   | 0.0      |         |                   |  | 0.0   |         |       |   | 63.8     |          |         |  | 103.0 |      
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         
|Total                                               |                     |                   | 38,988.9 |         |                   |  | 138.2 |         |       |   | 37,643.4 |          |         |  | 841.0 |      
|                                                    |                     |                   |          |         |                   |  |       |         |       |   |          |         

F-73



---



##### Table of Contents



|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       |  |          |         |  |  |        |       |  
|----------------------------------------------- | ------------------ | ----------------- | -------- | --------------- | ----------------- |  | ------ | ----------------- | - |  | -------- | -------- |  | ------- | ------ | ----- | ----- |  | -------- | ------- |  |  | ------ | ----- | -
|                                                |                    |                   |          | Thereof Trading |                   |  |       
|                                                |                    |                   |          |                 |                   |  |        |                   |  
|Total Volume of Electricity, Gas, Coal, Oil and |                    | December 31, 2005 |          |                 | December 31, 2005 |  |        | December 31, 2004 |  
|Emissions-Related                               |                    |                   |          |                 |                   |  |        |                   |  
|Financial Derivatives                           |                    | Nominal           |          |                 | Fair              |  |        | Nominal           |   |  | Fair     |          |  | Nominal |        |       | Fair  | 
| in millions                                   |                    | value             |          |                 | value             |  |        | value             |   |  | value    |          |  | value   |        |       | value | 
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Electricity forwards                            |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       |  |          |         |  |  |        |      
|                                                | up to 1 year       |                   |          | 15,379.4        |                   |  |        | 24.0              |   |  |          | 14,221.3 |  |         |        | (64.0 | )     |  |          | 7,521.9 |  |  |        | 41.6  |  
|                                                | 1 year to 3 years  |                   |          | 4,722.5         |                   |  |        | (116.1            | ) |  |          | 4,228.7  |  |         |        | (95.0 | )     |  |          | 2,306.2 |  |  |        | (39.9 | )
|                                                | 4 years to 5 years |                   |          | 54.4            |                   |  |        | (5.0              | ) |  |          | 12.0     |  |         |        | (0.5  | )     |  |          | 59.6    |  |  |        | (0.4  | )
|                                                | more than 5 years  |                   |          | 9.6             |                   |  |        | 0.8               |   |  |          | 1.9      |  |         |        | (0.1  | )     |  |          | 7.5     |  |  |        | (1.0  | )
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Subtotal                                        |                    |                   | 20,165.9 |                 |                   |  | (96.3  | )                 |   |  | 18,463.9 |          |  |         | (159.6 | )     |       |  | 9,895.2  |         |  |  | 0.3    |      
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Exchange-traded electricity forwards            |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       |  |          |         |  |  |        |      
|                                                | up to 1 year       |                   |          | 3,316.7         |                   |  |        | (103.6            | ) |  |          | 2,402.8  |  |         |        | 49.6  |       |  |          | 3,085.4 |  |  |        | (93.3 | )
|                                                | 1 year to 3 years  |                   |          | 1,621.4         |                   |  |        | (18.1             | ) |  |          | 985.4    |  |         |        | 49.8  |       |  |          | 1,309.9 |  |  |        | (9.9  | )
|                                                | 4 years to 5 years |                   |          | 17.6            |                   |  |        | (1.4              | ) |  |          | 17.6     |  |         |        | (1.4  | )     |  |          |        |  |  |        |      |  
|                                                | more than 5 years  |                   |          | 1.9             |                   |  |        | 0.1               |   |  |          | 1.9      |  |         |        | 0.1   |       |  |          |        |  |  |        |      |  
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Subtotal                                        |                    |                   | 4,957.6  |                 |                   |  | (123.0 | )                 |   |  | 3,407.7  |          |  |         | 98.1   |       |       |  | 4,395.3  |         |  |  | (103.2 | )    
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Electricity swaps                               |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       |  |          |         |  |  |        |      
|                                                | up to 1 year       |                   |          | 88.3            |                   |  |        | (21.6             | ) |  |          |         |  |         |        |      |       |  |          | 29.7    |  |  |        | 0.3   |  
|                                                | 1 year to 3 years  |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          | 3.1     |  |  |        | (0.1  | )
|                                                | 4 years to 5 years |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                | more than 5 years  |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Subtotal                                        |                    |                   | 88.3     |                 |                   |  | (21.6  | )                 |   |  | 0.0      |          |  |         | 0.0    |       |       |  | 32.8     |         |  |  | 0.2    |      
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Electricity options                             |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       |  |          |         |  |  |        |      
|                                                | up to 1 year       |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          | 8.8     |  |  |        | (0.2  | )
|                                                | 1 year to 3 years  |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                | 4 years to 5 years |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                | more than 5 years  |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Subtotal                                        |                    |                   | 0.0      |                 |                   |  | 0.0    |                   |   |  | 0.0      |          |  |         | 0.0    |       |       |  | 8.8      |         |  |  | (0.2   | )    
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Exchange-traded electricity options             |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       |  |          |         |  |  |        |      
|                                                | up to 1 year       |                   |          | 12.1            |                   |  |        | (0.7              | ) |  |          | 12.1     |  |         |        | (0.7  | )     |  |          | 64.9    |  |  |        | (1.5  | )
|                                                | 1 year to 3 years  |                   |          | 71.7            |                   |  |        | (0.2              | ) |  |          | 71.7     |  |         |        | (0.2  | )     |  |          | 132.6   |  |  |        | (1.6  | )
|                                                | 4 years to 5 years |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                | more than 5 years  |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Subtotal                                        |                    |                   | 83.8     |                 |                   |  | (0.9   | )                 |   |  | 83.8     |          |  |         | (0.9   | )     |       |  | 197.5    |         |  |  | (3.1   | )    
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Coal forwards and swaps                         |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       |  |          |         |  |  |        |      
|                                                | up to 1 year       |                   |          | 839.4           |                   |  |        | (46.0             | ) |  |          | 127.2    |  |         |        | (2.8  | )     |  |          | 1,541.6 |  |  |        | 26.8  |  
|                                                | 1 year to 3 years  |                   |          | 439.9           |                   |  |        | (3.0              | ) |  |          | 51.3     |  |         |        | (1.9  | )     |  |          | 851.2   |  |  |        | 18.3  |  
|                                                | 4 years to 5 years |                   |          | 31.9            |                   |  |        | (1.4              | ) |  |          |         |  |         |        |      |       |  |          | 112.0   |  |  |        | 1.1   |  
|                                                | more than 5 years  |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Subtotal                                        |                    |                   | 1,311.2  |                 |                   |  | (50.4  | )                 |   |  | 178.5    |          |  |         | (4.7   | )     |       |  | 2,504.8  |         |  |  | 46.2   |      
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Oil derivatives                                 |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       |  |          |         |  |  |        |      
|                                                | up to 1 year       |                   |          | 845.0           |                   |  |        | 106.1             |   |  |          | 103.5    |  |         |        | 0.6   |       |  |          | 405.0   |  |  |        | 28.5  |  
|                                                | 1 year to 3 years  |                   |          | 341.7           |                   |  |        | 59.1              |   |  |          |         |  |         |        |      |       |  |          | 266.0   |  |  |        | 28.1  |  
|                                                | 4 years to 5 years |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          | 2.8     |  |  |        |      |  
|                                                | more than 5 years  |                   |          |                |                   |  |        |                  |   |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Subtotal                                        |                    |                   | 1,186.7  |                 |                   |  | 165.2  |                   |   |  | 103.5    |          |  |         | 0.6    |       |       |  | 673.8    |         |  |  | 56.6   |      
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Gas forwards                                    |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       |  |          |         |  |  |        |      
|                                                | up to 1 year       |                   |          | 4,628.7         |                   |  |        | 380.8             |   |  |          | 483.8    |  |         |        | (65.2 | )     |  |          | 1,606.8 |  |  |        | 77.4  |  
|                                                | 1 year to 3 years  |                   |          | 4,226.9         |                   |  |        | 541.4             |   |  |          | 250.5    |  |         |        | (8.8  | )     |  |          | 1,117.9 |  |  |        | 131.7 |  
|                                                | 4 years to 5 years |                   |          | 763.7           |                   |  |        | 27.4              |   |  |          | 61.7     |  |         |        | 1.5   |       |  |          | 426.0   |  |  |        | 2.0   |  
|                                                | more than 5 years  |                   |          | 92.6            |                   |  |        | (17.7             | ) |  |          |         |  |         |        |      |       |  |          |        |  |  |        |      |  
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Subtotal                                        |                    |                   | 9,711.9  |                 |                   |  | 931.9  |                   |   |  | 796.0    |          |  |         | (72.5  | )     |       |  | 3,150.7  |         |  |  | 211.1  |      
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 
|Carryover                                       |                    |                   | 37,505.4 |                 |                   |  | 804.9  |                   |   |  | 23,033.4 |          |  |         | (139.0 | )     |       |  | 20,858.9 |         |  |  | 207.9  |      
|                                                |                    |                   |          |                 |                   |  |        |                   |   |  |          |          |  |         |        |       |       | 

F-74



---



##### Table of Contents



|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       |  |          |         |  |  |       |       |  
|----------------------------------------------- | ------------------ | ----------------- | -------- | --------------- | ----------------- |  | ------- | ----------------- | - |  | -------- | ------- |  | ------- | ------ | --- | ----- |  | -------- | ------- |  |  | ----- | ----- | -
|                                                |                    |                   |          | Thereof Trading |                   |  |        
|                                                |                    |                   |          |                 |                   |  |         |                   |  
|Total Volume of Electricity, Gas, Coal, Oil and |                    | December 31, 2005 |          |                 | December 31, 2005 |  |         | December 31, 2004 |  
|Emissions-Related                               |                    |                   |          |                 |                   |  |         |                   |  
|Financial Derivatives                           |                    | Nominal           |          |                 | Fair              |  |         | Nominal           |   |  | Fair     |         |  | Nominal |        |     | Fair  | 
| in millions                                   |                    | value             |          |                 | value             |  |         | value             |   |  | value    |         |  | value   |        |     | value | 
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Carryover                                       |                    |                   | 37,505.4 |                 |                   |  | 804.9   |                   |   |  | 23,033.4 |         |  |         | (139.0 | )   |       |  | 20,858.9 |         |  |  | 207.9 |      
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Gas swaps                                       |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       |  |          |         |  |  |       |      
|                                                | up to 1 year       |                   |          | 1,987.3         |                   |  |         | 277.4             |   |  |          | 1,340.7 |  |         |        | 3.4 |       |  |          | 1,908.1 |  |  |       | 78.1  |  
|                                                | 1 year to 3 years  |                   |          | 1,645.0         |                   |  |         | 306.8             |   |  |          | 594.0   |  |         |        | 0.8 |       |  |          | 1,513.9 |  |  |       | 143.6 |  
|                                                | 4 years to 5 years |                   |          | 737.0           |                   |  |         | 86.9              |   |  |          |        |  |         |        |    |       |  |          | 503.1   |  |  |       | (7.0  | )
|                                                | more than 5 years  |                   |          | 1,892.3         |                   |  |         | 7.9               |   |  |          |        |  |         |        |    |       |  |          | 373.8   |  |  |       | (24.2 | )
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Subtotal                                        |                    |                   | 6,261.6  |                 |                   |  | 679.0   |                   |   |  | 1,934.7  |         |  |         | 4.2    |     |       |  | 4,298.9  |         |  |  | 190.5 |      
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Gas options                                     |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       |  |          |         |  |  |       |      
|                                                | up to 1 year       |                   |          | 43.3            |                   |  |         | (16.7             | ) |  |          |        |  |         |        |    |       |  |          | 34.1    |  |  |       | (7.6  | )
|                                                | 1 year to 3 years  |                   |          |                |                   |  |         |                  |   |  |          |        |  |         |        |    |       |  |          | 24.5    |  |  |       | (7.7  | )
|                                                | 4 years to 5 years |                   |          |                |                   |  |         |                  |   |  |          |        |  |         |        |    |       |  |          |        |  |  |       |      |  
|                                                | more than 5 years  |                   |          |                |                   |  |         |                  |   |  |          |        |  |         |        |    |       |  |          |        |  |  |       |      |  
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Subtotal                                        |                    |                   | 43.3     |                 |                   |  | (16.7   | )                 |   |  | 0.0      |         |  |         | 0.0    |     |       |  | 58.6     |         |  |  | (15.3 | )    
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Emissions-related derivatives                   |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       |  |          |         |  |  |       |      
|                                                | up to 1 year       |                   |          | 98.4            |                   |  |         | 4.9               |   |  |          | 92.3    |  |         |        | 0.8 |       |  |          | 28.8    |  |  |       | (0.5  | )
|                                                | 1 year to 3 years  |                   |          | 24.3            |                   |  |         | 1.6               |   |  |          | 20.2    |  |         |        | 0.2 |       |  |          | 5.9     |  |  |       | (0.1  | )
|                                                | 4 years to 5 years |                   |          |                |                   |  |         |                  |   |  |          |        |  |         |        |    |       |  |          |        |  |  |       |      |  
|                                                | more than 5 years  |                   |          |                |                   |  |         |                  |   |  |          |        |  |         |        |    |       |  |          |        |  |  |       |      |  
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Subtotal                                        |                    |                   | 122.7    |                 |                   |  | 6.5     |                   |   |  | 112.5    |         |  |         | 1.0    |     |       |  | 34.7     |         |  |  | (0.6  | )    
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Exchange-traded emissions-related derivatives   |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       |  |          |         |  |  |       |      
|                                                | up to 1 year       |                   |          | 11.4            |                   |  |         | 0.3               |   |  |          | 8.9     |  |         |        | 0.3 |       |  |          |        |  |  |       |      |  
|                                                | 1 year to 3 years  |                   |          | 5.6             |                   |  |         | 0.3               |   |  |          | 1.4     |  |         |        | 0.2 |       |  |          |        |  |  |       |      |  
|                                                | 4 years to 5 years |                   |          |                |                   |  |         |                  |   |  |          |        |  |         |        |    |       |  |          |        |  |  |       |      |  
|                                                | more than 5 years  |                   |          |                |                   |  |         |                  |   |  |          |        |  |         |        |    |       |  |          |        |  |  |       |      |  
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Subtotal                                        |                    |                   | 17.0     |                 |                   |  | 0.6     |                   |   |  | 10.3     |         |  |         | 0.5    |     |       |  | 0.0      |         |  |  | 0.0   |      
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 
|Total                                           |                    |                   | 43,950.0 |                 |                   |  | 1,474.3 |                   |   |  | 25,090.9 |         |  |         | (133.3 | )   |       |  | 25,251.1 |         |  |  | 382.5 |      
|                                                |                    |                   |          |                 |                   |  |         |                   |   |  |          |         |  |         |        |     |       | 

Counterparty Risk from the Use of Derivative Financial
Instruments











F-75



---



##### Table of Contents





|                                                 |  |                   |          |          |              |  |         |              |          |  |                   |  |  |          |         |  |       |  |          |         |  |  |         |  |  |  |          |  |  |  |       | 
|------------------------------------------------ |  | ----------------- | -------- | -------- | ------------ |  | ------- | ------------ | -------- |  | ----------------- |  |  | -------- | ------- |  | ----- |  | -------- | ------- |  |  | ------- |  |  |  | -------- |  |  |  | ----- | 
|                                                 |  | December 31, 2005 |         
|                                                 |  |                   |         
|                                                 |  | Total             |          |          | Up to 1 Year |  |         | 1 to 5 Years |          |  | More than 5 Years | 
|                                                 |  |                   |          |          |              |  |         |              |          |  |                   | 
|Rating of Counterparties                         |  |                   |          | Counter- |              |  |         |              | Counter- |  |                   |  |  | Counter- |         |  |       |  | Counter- |        
|Standard & Poors and/or Moodys                 |  | Nominal           |          |          | party        |  |         | Nominal      |          |  | party             |  |  | Nominal  |         |  | party |  |          | Nominal |  |  | party   | 
| in millions                                    |  | value             |          |          | risk         |  |         | value        |          |  | risk              |  |  | value    |         |  | risk  |  |          | value   |  |  | risk    | 
|                                                 |  |                   |          |          |              |  |         |              |          |  |                   |  |  |          |         |  |       |  |          |         |  |  |         | 
|AAA and Aaa through AA- and Aa3                  |  |                   | 28,821.5 |          |              |  | 2,557.9 |              |          |  | 11,489.8          |  |  |          | 1,036.7 |  |       |  | 11,738.9 |         |  |  | 994.6   |  |  |  | 5,592.8  |  |  |  | 526.6 | 
|AA- and A1 or A+ and Aa3 through A- and A3       |  |                   | 19,604.5 |          |              |  | 1,108.4 |              |          |  | 8,416.0           |  |  |          | 787.4   |  |       |  | 8,791.6  |         |  |  | 314.9   |  |  |  | 2,396.9  |  |  |  | 6.1   | 
|A- and Baa1 or BBB+ and A3 through BBB- or Baa3  |  |                   | 4,805.1  |          |              |  | 652.1   |              |          |  | 3,503.1           |  |  |          | 450.8   |  |       |  | 997.8    |         |  |  | 201.3   |  |  |  | 304.2    |  |  |  |      | 
|BBB- and Ba1 or BB+ and Baa3 through BB- and Ba3 |  |                   | 1,403.0  |          |              |  | 182.4   |              |          |  | 944.1             |  |  |          | 142.7   |  |       |  | 372.4    |         |  |  | 38.8    |  |  |  | 86.5     |  |  |  | 0.9   | 
|Other (1)                                        |  |                   | 23,246.3 |          |              |  | 2,648.2 |              |          |  | 15,276.2          |  |  |          | 2,067.9 |  |       |  | 5,760.1  |         |  |  | 530.1   |  |  |  | 2,210.0  |  |  |  | 50.2  | 
|                                                 |  |                   |          |          |              |  |         |              |          |  |                   |  |  |          |         |  |       |  |          |         |  |  |         | 
|Total                                            |  |                   | 77,880.4 |          |              |  | 7,149.0 |              |          |  | 39,629.2          |  |  |          | 4,485.5 |  |       |  | 27,660.8 |         |  |  | 2,079.7 |  |  |  | 10,590.4 |  |  |  | 583.8 | 
|                                                 |  |                   |          |          |              |  |         |              |          |  |                   |  |  |          |         |  |       |  |          |         |  |  |         | 






|    |                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This position consists primarily of parties to contracts with
    respect to which E.ON has received collateral from
    counterparties with ratings of the above categories or with an
    equivalent internal rating.



|     |                                     
|---- | ------------------------------------
|(29) | Non-Derivative Financial Instruments





|              |                                                  |                   |        |        |                   |  |        |            |  |  |            |        |  |  |        |        | 
|------------- | ------------------------------------------------ | ----------------- | ------ | ------ | ----------------- |  | ------ | ---------- |  |  | ---------- | ------ |  |  | ------ | ------ | 
|              |                                                  | December 31, 2005 |        |        | December 31, 2004 | 
|              |                                                  |                   |        |        |                   | 
| in millions |                                                  | Book value        |        |        | Fair value        |  |        | Book value |  |  | Fair value |       
|              |                                                  |                   |        |        |                   |  |        |            |  |  |            |       
|Assets        |                                                  |                   |        |        |                   |  |        |            |  |  |            |        |  |  |        |       
|              | Loans                                            |                   |        | 1,100  |                   |  |        | 1,112      |  |  |            | 1,438  |  |  |        | 1,477  | 
|              | Securities                                       |                   |        | 10,420 |                   |  |        | 10,420     |  |  |            | 8,617  |  |  |        | 8,617  | 
|              | Financial receivables and other financial assets |                   |        | 2,019  |                   |  |        | 2,019      |  |  |            | 2,124  |  |  |        | 2,124  | 
|              | Cash and deposits at banking institutions        |                   |        | 5,859  |                   |  |        | 5,859      |  |  |            | 4,233  |  |  |        | 4,233  | 
|              |                                                  |                   |        |        |                   |  |        |            |  |  |            |       
|Total         |                                                  |                   | 19,398 |        |                   |  | 19,410 |            |  |  | 16,412     |        |  |  | 16,451 |       
|              |                                                  |                   |        |        |                   |  |        |            |  |  |            |       
|Liabilities   |                                                  |                   |        |        |                   |  |        |            |  |  |            |        |  |  |        |       
|              | Financial liabilities                            |                   |        | 14,362 |                   |  |        | 15,421     |  |  |            | 20,301 |  |  |        | 21,168 | 
|              |                                                  |                   |        |        |                   |  |        |            |  |  |            |       







F-76



---



##### Table of Contents







|     |                                  
|---- | ---------------------------------
|(30) | Transactions with Related Parties



|              |  |      |       |  |      |  |       | 
|------------- |  | ---- | ----- |  | ---- |  | ----- | 
| in millions |  | 2005 |       |  | 2004 | 
|              |  |      |       |  |      | 
|Income        |  |      | 5,408 |  |      |  | 4,846 | 
|Expenses      |  |      | 2,913 |  |      |  | 2,530 | 
|Receivables   |  |      | 2,263 |  |      |  | 1,686 | 
|Liabilities   |  |      | 2,161 |  |      |  | 1,973 | 





      


  


(31)     Segment Information






| |   |                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Central Europe market unit, led by E.ON Energie AG, Munich,
    Germany, focuses on E.ONs integrated electricity business
    and the downstream gas business in central Europe.                                                                                    
|
| |  | Pan-European Gas is responsible for the upstream and midstream
    gas business. Additionally, this market unit holds a number of
    minority shareholdings in the downstream gas business. The lead
    company of this market unit is E.ON Ruhrgas AG, Essen, Germany.

F-77



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The U.K. market unit encompasses the integrated energy business
    in the United Kingdom. This market unit is led by E.ON UK plc,
    Coventry, U.K.                                                                                                                                                                
|
| |  | The Nordic market unit, which is led by E.ON Nordic AB,
    Malmö, Sweden, focuses on the integrated energy business in
    Northern Europe. It operates through the integrated energy
    company E.ON Sverige AB, Malmö, Sweden, and through E.ON
    Finland Oyj, Espoo, Finland, primarily in Sweden and Finland.
|
| |  | The U.S. Midwest market unit, led by E.ON U.S. LLC,
    Louisville, Kentucky, U.S., is primarily active in the regulated
    energy market in the U.S. state of Kentucky.                                                                                                                                            
|
| |  | The Corporate Center contains those interests managed directly
    by E.ON AG that have not been allocated to any of the other
    segments, E.ON AG itself and the consolidation effects at the
    Group level.                                                                                                    









|                                                                                        |  |      |        |   |      |  |        |      |  |  |        |  
|--------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | -
| in millions                                                                           |  | 2005 |        |   | 2004 |  |        | 2003 | 
|                                                                                        |  |      |        |   |      |  |        |      | 
|Adjusted EBIT                                                                           |  |      | 7,333  |   |      |  | 6,787  |      |  |  | 5,707  |  
|Adjusted interest income (net)                                                          |  |      | (1,027 | ) |      |  | (1,031 | )    |  |  | (1,515 | )
|Net book gains                                                                          |  |      | 491    |   |      |  | 589    |      |  |  | 1,257  |  
|Cost-management and restructuring expenses                                              |  |      | (29    | ) |      |  | (100   | )    |  |  | (479   | )
|Other non-operating earnings                                                            |  |      | 440    |   |      |  | 110    |      |  |  | 195    |  
|                                                                                        |  |      |        |   |      |  |        |      | 
|Income/(Loss) from continuing operations
    before income taxes and minority interests |  |      | 7,208  |   |      |  | 6,355  |      |  |  | 5,165  |  
|Income taxes                                                                            |  |      | (2,276 | ) |      |  | (1,850 | )    |  |  | (1,145 | )
|Minority interests                                                                      |  |      | (553   | ) |      |  | (478   | )    |  |  | (445   | )
|Income/(Loss) from continuing operations                                                |  |      | 4,379  |   |      |  | 4,027  |      |  |  | 3,575  |  
|                                                                                        |  |      |        |   |      |  |        |      | 
|Income/(Loss) from discontinued operations, net                                         |  |      | 3,035  |   |      |  | 312    |      |  |  | 1,512  |  
|Cumulative effect of changes in accounting principles, net                              |  |      | (7     | ) |      |  |       |      |  |  | (440   | )
|                                                                                        |  |      |        |   |      |  |        |      | 
|Net income                                                                              |  |      | 7,407  |   |      |  | 4,339  |      |  |  | 4,647  |  
|                                                                                        |  |      |        |   |      |  |        |      | 

         


  


F-78



---



##### Table of Contents



 


        




|                                                   |                                                             |                |        |     |                  |  |        |      |  |  |        |     |  |         |        |     |         |  |        |      |  |  |        |     |  |      |        |    |      |  |        |      |  |  |        |    |  |  |        |   |  |  |        |    |  |  |        |    | 
|-------------------------------------------------- | ----------------------------------------------------------- | -------------- | ------ | --- | ---------------- |  | ------ | ---- |  |  | ------ | --- |  | ------- | ------ | --- | ------- |  | ------ | ---- |  |  | ------ | --- |  | ---- | ------ | -- | ---- |  | ------ | ---- |  |  | ------ | -- |  |  | ------ | - |  |  | ------ | -- |  |  | ------ | -- | 
|                                                   |                                                             | Central Europe |        |     | Pan-European Gas |  |        | U.K. |  |  | Nordic |    
|                                                   |                                                             |                |        |     |                  |  |        |      |  |  |        |    
| in millions                                      |                                                             | 2005           |        |     | 2004             |  |        | 2003 |  |  | 2005   |     |  | 2004(1) |        |     | 2003(1) |  |        | 2005 |  |  | 2004   |     |  | 2003 |        |    | 2005 |  |        | 2004 |  |  | 2003   |   
|                                                   |                                                             |                |        |     |                  |  |        |      |  |  |        |     |  |         |        |     |         |  |        |      |  |  |        |     |  |      |        |    |      |  |        |      |  |  |        |   
|External sales                                     |                                                             |                | 24,047 |     |                  |  | 20,540 |      |  |  | 18,983 |     |  |         | 16,835 |     |         |  | 12,671 |      |  |  | 11,530 |     |  |      | 10,102 |    |      |  | 8,480  |      |  |  | 7,915  |    |  |  | 3,369  |   |  |  | 3,281  |    |  |  | 2,776  |   
|Intersegment sales                                 |                                                             |                | 248    |     |                  |  | 212    |      |  |  | 270    |     |  |         | 1,079  |     |         |  | 556    |      |  |  | 389    |     |  |      | 74     |    |      |  | 10     |      |  |  | 8      |    |  |  | 102    |   |  |  | 66     |    |  |  | 48     |   
|                                                   |                                                             |                |        |     |                  |  |        |      |  |  |        |     |  |         |        |     |         |  |        |      |  |  |        |     |  |      |        |    |      |  |        |      |  |  |        |   
|Total sales                                        |                                                             |                | 24,295 |     |                  |  | 20,752 |      |  |  | 19,253 |     |  |         | 17,914 |     |         |  | 13,227 |      |  |  | 11,919 |     |  |      | 10,176 |    |      |  | 8,490  |      |  |  | 7,923  |    |  |  | 3,471  |   |  |  | 3,347  |    |  |  | 2,824  |   
|                                                   |                                                             |                |        |     |                  |  |        |      |  |  |        |     |  |         |        |     |         |  |        |      |  |  |        |     |  |      |        |    |      |  |        |      |  |  |        |   
|Depreciation and amortization                      |                                                             |                | (1,298 | )   |                  |  | (1,121 | )    |  |  | (1,447 | )   |  |         | (387   | )   |         |  | (334   | )    |  |  | (371   | )   |  |      | (586   | )  |      |  | (575   | )    |  |  | (426   | )  |  |  | (379   | ) |  |  | (420   | )  |  |  | (386   | ) 
|Impairments(3)                                     |                                                             |                | (56    | )   |                  |  | (185   | )    |  |  | (45    | )   |  |         | (16    | )   |         |  | (94    | )    |  |  | (4     | )   |  |      | (1     | )  |      |  |       |      |  |  |       |    |  |  | (8     | ) |  |  |       |    |  |  | (1     | ) 
|Adjusted EBIT                                      |                                                             |                | 3,930  |     |                  |  | 3,602  |      |  |  | 2,979  |     |  |         | 1,536  |     |         |  | 1,344  |      |  |  | 1,401  |     |  |      | 963    |    |      |  | 1,017  |      |  |  | 610    |    |  |  | 806    |   |  |  | 701    |    |  |  | 546    |   
|                                                   | Thereof: earnings from companies accounted for at equity(4) |                |        | 189 |                  |  |        | 143  |  |  |        | 290 |  |         |        | 509 |         |  |        | 419  |  |  |        | 406 |  |      |        | 17 |      |  |        | 43   |  |  |        | 36 |  |  |        | 9 |  |  |        | 10 |  |  |        | 21 | 
|Intangible assets and property plant and equipment |                                                             |                | 1,519  |     |                  |  | 1,388  |      |  |  | 1,255  |     |  |         | 263    |     |         |  | 105    |      |  |  | 169    |     |  |      | 565    |    |      |  | 511    |      |  |  | 322    |    |  |  | 407    |   |  |  | 350    |    |  |  | 369    |   
|Financial assets                                   |                                                             |                | 658    |     |                  |  | 1,139  |      |  |  | 871    |     |  |         | 268    |     |         |  | 509    |      |  |  | 442    |     |  |      | 361    |    |      |  | (8     | )    |  |  | 66     |    |  |  | 131    |   |  |  | 390    |    |  |  | 896    |   
|                                                   |                                                             |                |        |     |                  |  |        |      |  |  |        |     |  |         |        |     |         |  |        |      |  |  |        |     |  |      |        |    |      |  |        |      |  |  |        |   
|Investments                                        |                                                             |                | 2,177  |     |                  |  | 2,527  |      |  |  | 2,126  |     |  |         | 531    |     |         |  | 614    |      |  |  | 611    |     |  |      | 926    |    |      |  | 503    |      |  |  | 388    |    |  |  | 538    |   |  |  | 740    |    |  |  | 1,265  |   
|                                                   |                                                             |                |        |     |                  |  |        |      |  |  |        |     |  |         |        |     |         |  |        |      |  |  |        |     |  |      |        |    |      |  |        |      |  |  |        |   
|Total assets                                       |                                                             |                | 60,531 |     |                  |  | 55,537 |      |  |  | 54,808 |     |  |         | 30,746 |     |         |  | 22,720 |      |  |  | 22,928 |     |  |      | 19,177 |    |      |  | 14,986 |      |  |  | 12,610 |    |  |  | 11,193 |   |  |  | 11,289 |    |  |  | 10,662 |   
|                                                   |                                                             |                |        |     |                  |  |        |      |  |  |        |     |  |         |        |     |         |  |        |      |  |  |        |     |  |      |        |    |      |  |        |      |  |  |        |   

|                                                   |                                                             |              |       |    |                  |  |       |                      |  |  |                     |    |  |         |        |   |         |  |        |      |   |  |         |    |  |         |         |     |      |  |         |         |  |  |         |     |  |  |       |     |  |  |       |     |  |  |       |     | 
|-------------------------------------------------- | ----------------------------------------------------------- | ------------ | ----- | -- | ---------------- |  | ----- | -------------------- |  |  | ------------------- | -- |  | ------- | ------ | - | ------- |  | ------ | ---- | - |  | ------- | -- |  | ------- | ------- | --- | ---- |  | ------- | ------- |  |  | ------- | --- |  |  | ----- | --- |  |  | ----- | --- |  |  | ----- | --- | 
|                                                   |                                                             | U.S. Midwest |       |    | Corporate Center |  |       | Core Energy Business |  |  | Other Activities(2) |   
|                                                   |                                                             |              |       |    |                  |  |       |                      |  |  |                     |   
| in millions                                      |                                                             | 2005         |       |    | 2004(1)          |  |       | 2003(1)              |  |  | 2005                |    |  | 2004(1) |        |   | 2003(1) |  |        | 2005 |   |  | 2004(1) |    |  | 2003(1) |         |     | 2005 |  |         | 2004(1) |  |  | 2003(1) |    
|                                                   |                                                             |              |       |    |                  |  |       |                      |  |  |                     |    |  |         |        |   |         |  |        |      |   |  |         |    |  |         |         |     |      |  |         |         |  |  |         |    
|External sales                                     |                                                             |              | 2,045 |    |                  |  | 1,718 |                      |  |  | 1,771               |    |  |         | 1      |   |         |  | 52     |      |   |  | 141     |    |  |         | 56,399  |     |      |  | 46,742  |         |  |  | 43,116  |     |  |  |      |     |  |  |      |     |  |  | 993   |    
|Intersegment sales                                 |                                                             |              |      |    |                  |  |      |                      |  |  |                    |    |  |         | (1,503 | ) |         |  | (844   | )    |   |  | (716    | )  |  |         |        |     |      |  |        |         |  |  | (1      | )   |  |  |      |     |  |  |      |     |  |  | 1     |    
|                                                   |                                                             |              |       |    |                  |  |       |                      |  |  |                     |    |  |         |        |   |         |  |        |      |   |  |         |    |  |         |         |     |      |  |         |         |  |  |         |    
|Total sales                                        |                                                             |              | 2,045 |    |                  |  | 1,718 |                      |  |  | 1,771               |    |  |         | (1,502 | ) |         |  | (792   | )    |   |  | (575    | )  |  |         | 56,399  |     |      |  | 46,742  |         |  |  | 43,115  |     |  |  |      |     |  |  |      |     |  |  | 994   |    
|                                                   |                                                             |              |       |    |                  |  |       |                      |  |  |                     |    |  |         |        |   |         |  |        |      |   |  |         |    |  |         |         |     |      |  |         |         |  |  |         |    
|Depreciation and amortization                      |                                                             |              | (195  | )  |                  |  | (185  | )                    |  |  | (192                | )  |  |         | (12    | ) |         |  | (22    | )    |   |  | (19     | )  |  |         | (2,857  | )   |      |  | (2,657  | )       |  |  | (2,841  | )   |  |  |      |     |  |  |      |     |  |  | (59   | )  
|Impairments(3)                                     |                                                             |              |      |    |                  |  |      |                      |  |  |                    |    |  |         | (1     | ) |         |  | (18    | )    |   |  | (26     | )  |  |         | (82     | )   |      |  | (297    | )       |  |  | (76     | )   |  |  |      |     |  |  |      |     |  |  |      |    
|Adjusted EBIT                                      |                                                             |              | 365   |    |                  |  | 354   |                      |  |  | 318                 |    |  |         | (399   | ) |         |  | (338   | )    |   |  | (323    | )  |  |         | 7,201   |     |      |  | 6,680   |         |  |  | 5,531   |     |  |  | 132   |     |  |  | 107   |     |  |  | 176   |    
|                                                   | Thereof: earnings from companies accounted for at equity(4) |              |       | 17 |                  |  |       | 17                   |  |  |                     | 17 |  |         |        | 9 |         |  |        | (42  | ) |  |         | 33 |  |         |         | 750 |      |  |         | 590     |  |  |         | 803 |  |  |       | 132 |  |  |       | 107 |  |  |       | 105 | 
|Intangible assets and property plant and equipment |                                                             |              | 227   |    |                  |  | 247   |                      |  |  | 411                 |    |  |         | 9      |   |         |  | 11     |      |   |  | (24     | )  |  |         | 2,990   |     |      |  | 2,612   |         |  |  | 2,502   |     |  |  |      |     |  |  |      |     |  |  | 36    |    
|Financial assets                                   |                                                             |              |      |    |                  |  |      |                      |  |  |                    |    |  |         | (71    | ) |         |  | 467    |      |   |  | 4,200   |    |  |         | 1,347   |     |      |  | 2,497   |         |  |  | 6,475   |     |  |  |      |     |  |  |      |     |  |  |      |    
|                                                   |                                                             |              |       |    |                  |  |       |                      |  |  |                     |    |  |         |        |   |         |  |        |      |   |  |         |    |  |         |         |     |      |  |         |         |  |  |         |    
|Investments                                        |                                                             |              | 227   |    |                  |  | 247   |                      |  |  | 411                 |    |  |         | (62    | ) |         |  | 478    |      |   |  | 4,176   |    |  |         | 4,337   |     |      |  | 5,109   |         |  |  | 8,977   |     |  |  |      |     |  |  |      |     |  |  | 36    |    
|                                                   |                                                             |              |       |    |                  |  |       |                      |  |  |                     |    |  |         |        |   |         |  |        |      |   |  |         |    |  |         |         |     |      |  |         |         |  |  |         |    
|Total assets                                       |                                                             |              | 9,296 |    |                  |  | 7,643 |                      |  |  | 8,367               |    |  |         | (6,186 | ) |         |  | (5,794 | )    |   |  | (5,971  | )  |  |         | 124,757 |     |      |  | 106,381 |         |  |  | 103,404 |     |  |  | 1,805 |     |  |  | 7,681 |     |  |  | 8,446 |    
|                                                   |                                                             |              |       |    |                  |  |       |                      |  |  |                     |    |  |         |        |   |         |  |        |      |   |  |         |    |  |         |         |     |      |  |         |         |  |  |         |    

F-79



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##### Table of Contents



|                                                   |                                                             |            |         |     |         |  |         |         |  |  |         |     | 
|-------------------------------------------------- | ----------------------------------------------------------- | ---------- | ------- | --- | ------- |  | ------- | ------- |  |  | ------- | --- | 
|                                                   |                                                             | E.ON Group |        
|                                                   |                                                             |            |        
| in millions                                      |                                                             | 2005       |         |     | 2004(1) |  |         | 2003(1) | 
|                                                   |                                                             |            |         |     |         |  |         |         | 
|External sales                                     |                                                             |            | 56,399  |     |         |  | 46,742  |         |  |  | 44,109  |    
|Intersegment sales                                 |                                                             |            |        |     |         |  |        |         |  |  |        |    
|                                                   |                                                             |            |         |     |         |  |         |         | 
|Total sales                                        |                                                             |            | 56,399  |     |         |  | 46,742  |         |  |  | 44,109  |    
|                                                   |                                                             |            |         |     |         |  |         |         | 
|Depreciation and amortization                      |                                                             |            | (2,857  | )   |         |  | (2,657  | )       |  |  | (2,900  | )  
|Impairments(3)                                     |                                                             |            | (82     | )   |         |  | (297    | )       |  |  | (76     | )  
|Adjusted EBIT                                      |                                                             |            | 7,333   |     |         |  | 6,787   |         |  |  | 5,707   |    
|                                                   | Thereof: earnings from companies accounted for at equity(4) |            |         | 882 |         |  |         | 697     |  |  |         | 908 | 
|Intangible assets and property plant and equipment |                                                             |            | 2,990   |     |         |  | 2,612   |         |  |  | 2,538   |    
|Financial assets                                   |                                                             |            | 1,347   |     |         |  | 2,497   |         |  |  | 6,475   |    
|                                                   |                                                             |            |         |     |         |  |         |         | 
|Investments                                        |                                                             |            | 4,337   |     |         |  | 5,109   |         |  |  | 9,013   |    
|                                                   |                                                             |            |         |     |         |  |         |         | 
|Total assets                                       |                                                             |            | 126,562 |     |         |  | 114,062 |         |  |  | 111,850 |    
|                                                   |                                                             |            |         |     |         |  |         |         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Adjusted for discontinued operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | The other activities of the E.ON Group include the
    42.9 percent interest in Degussa accounted for at equity in
    the Consolidated Financial Statements. In addition, the
    balance-sheet data reported by segment also include the
    at-equity carrying amount of Degussa and the total assets and
    liabilities of Viterra, which in 2004 was still reported under
    other activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(3) | For all periods presented, the impairment charges recognized in
    adjusted EBIT differed from the impairment charges recorded in
    accordance with U.S. GAAP. In 2005, the difference was the
    result of impairments recorded in the area of generation,
    specifically power-heat coupling plants in the U.K. market unit.
    In 2004, the difference was due to impairment charges on real
    property, on a municipal utility investment at the Central
    Europe market unit, and on an Asian power plant investment at
    the U.K. market unit, all of which were included in
    non-operating earnings. In 2003, the deviation was due to the
    impairment charge on an Asian power plant investment at the U.K.
    market unit, which was also included in non-operating earnings.                                                                                                                                 
|   
|(4) | For all periods presented, the earnings contributing to adjusted
    EBIT from companies accounted for at equity differed from the
    at-equity results recorded in accordance with U.S. GAAP. In
    2005, this was the result of impairment charges included in
    non-operating earnings. They relate to the Fine Chemicals
    division of Degussa and to deferred tax assets of an at-equity
    holding of the Corporate Center. In 2004, the impairment charges
    on a municipal utility investment at the Central Europe market
    unit and on an Asian power plant investment at the U.K. market
    unit were responsible for the difference. In 2003, the deviation
    was due to the reclassification of at equity earnings from RAG
    in other non-operating earnings and to the impairment charge on
    the U.K. market units Asian power plant investment, which
    was recorded in other non-operating earnings.





|                                                           |  |      |        |   |      |  |        |      |  |  |        |  
|---------------------------------------------------------- |  | ---- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | -
| in millions                                              |  | 2005 |        |   | 2004 |  |        | 2003 | 
|                                                           |  |      |        |   |      |  |        |      | 
|Interest and similar expenses (net) as shown in
    Note 6 |  |      | (736   | ) |      |  | (1,062 | )    |  |  | (978   | )
|(+) Non-operating interest income, net (1)                 |  |      | (39    | ) |      |  | 151    |      |  |  | (62    | )
|(-) Interest portion of long-term provisions               |  |      | 252    |   |      |  | 120    |      |  |  | 475    |  
|                                                           |  |      |        |   |      |  |        |      | 
|Adjusted interest income, net                              |  |      | (1,027 | ) |      |  | (1,031 | )    |  |  | (1,515 | )
|                                                           |  |      |        |   |      |  |        |      | 






|    |                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This figure is calculated by adding interest expenses and
    subtracting interest income. In 2005, non-operating interest
    income primarily related to an eliminated provision for
    interest. In 2004, non operating interest-net income primarily
    reflected tax-related interest.

F-80



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##### Table of Contents





Geographic Segmentation




|                              |                         |         |        |                  |                    |  |        |                |  |  |               |        |  |       |       |       |       |  |       |       |  |  |       |       |  |      |        |        |      |  |        |        |  |  |        |        |  |      |       |       |      |  |       |       |  |  |       |       |  |      |    |    |      |  |    |    |  |  |     |     |  |  |        |        |  |  |        |        |  |  |        |        | 
|----------------------------- | ----------------------- | ------- | ------ | ---------------- | ------------------ |  | ------ | -------------- |  |  | ------------- | ------ |  | ----- | ----- | ----- | ----- |  | ----- | ----- |  |  | ----- | ----- |  | ---- | ------ | ------ | ---- |  | ------ | ------ |  |  | ------ | ------ |  | ---- | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- |  | ---- | -- | -- | ---- |  | -- | -- |  |  | --- | --- |  |  | ------ | ------ |  |  | ------ | ------ |  |  | ------ | ------ | 
|                              |                         |         |        | Europe (Eurozone |                    |  |        |                |  |  |               |        | 
|                              |                         | Germany |        |                  | excluding Germany) |  |        | Europe (other) |  |  | United States |        |  | Other |       |       | Total | 
|                              |                         |         |        |                  |                    |  |        |                |  |  |               |        |  |       |       |       |       | 
| in millions                 |                         | 2005    |        |                  | 2004               |  |        | 2003           |  |  | 2005          |        |  | 2004  |       |       | 2003  |  |       | 2005  |  |  | 2004  |       |  | 2003 |        |        | 2005 |  |        | 2004   |  |  | 2003   |        |  | 2005 |       |       | 2004 |  |       | 2003  |  |  | 2005  |       |  | 2004 |    |    | 2003 | 
|                              |                         |         |        |                  |                    |  |        |                |  |  |               |        |  |       |       |       |       |  |       |       |  |  |       |       |  |      |        |        |      |  |        |        |  |  |        |        |  |      |       |       |      |  |       |       |  |  |       |       |  |      |    |    |      | 
|External sales                |                         |         |        |                  |                    |  |        |                |  |  |               |        |  |       |       |       |       |  |       |       |  |  |       |       |  |      |        |        |      |  |        |        |  |  |        |        |  |      |       |       |      |  |       |       |  |  |       |       |  |      |    |    |      |  |    |    |  |  |     |     |  |  |        |        |  |  |        |        |  |  |        |       
|                              | by location of customer |         |        | 33,557           |                    |  |        | 28,621         |  |  |               | 27,124 |  |       |       | 3,030 |       |  |       | 2,179 |  |  |       | 2,235 |  |      |        | 17,743 |      |  |        | 14,110 |  |  |        | 12,407 |  |      |       | 1,990 |      |  |       | 1,770 |  |  |       | 2,051 |  |      |    | 79 |      |  |    | 62 |  |  |     | 292 |  |  |        | 56,399 |  |  |        | 46,742 |  |  |        | 44,109 | 
|                              | by location of company  |         |        | 36,635           |                    |  |        | 30,028         |  |  |               | 28,484 |  |       |       | 1,476 |       |  |       | 1,462 |  |  |       | 1,546 |  |      |        | 16,243 |      |  |        | 13,482 |  |  |        | 11,827 |  |      |       | 1,980 |      |  |       | 1,711 |  |  |       | 2,073 |  |      |    | 65 |      |  |    | 59 |  |  |     | 179 |  |  |        | 56,399 |  |  |        | 46,742 |  |  |        | 44,109 | 
|Property, plant and equipment |                         |         | 19,010 |                  |                    |  | 23,171 |                |  |  | 23,418        |        |  |       | 1,339 |       |       |  | 1,283 |       |  |  | 1,331 |       |  |      | 16,819 |        |      |  | 15,327 |        |  |  | 13,898 |        |  |      | 4,072 |       |      |  | 3,693 |       |  |  | 4,044 |       |  |      | 83 |    |      |  | 89 |    |  |  | 106 |     |  |  | 41,323 |        |  |  | 43,563 |        |  |  | 42,797 |       

Information on Major Customers and Suppliers








|     |                                                          
|---- | ---------------------------------------------------------
|(32) | Compensation of Supervisory Board and Board of Management

Supervisory Board


 






Board of Management


 


   






F-81



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##### Table of Contents





|     |                  
|---- | -----------------
|(33) | Subsequent Events

 




  




   


F-82



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##### Table of Contents










F-83



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##### Table of Contents



SIGNATURES


20-F




| |        
| | -------
| | E.ON AG



| |     |                           
| | --- | --------------------------
| | By: | /s/ Dr. Erhard Schipporeit

| |                                      
| | -------------------------------------
| |                                      
| | Dr. Erhard Schipporeit               
| | Member of the Board of Management and
| | Chief Financial Officer              
|
| | /s/ Michael C. Wilhelm               
| |                                      
| | Michael C. Wilhelm                   
| | Senior Vice President Accounting